Landlords agree rent cut
Bhs thrown lifeline as creditors agree rescue deal
The proposed company voluntary arrangements (CVAs) were approved, paving the way for lower rents on some of the loss-making chain’s properties.
Will Wright, restructuring partner at KPMG and ‘supervisor’ of the CVAs, said: “Today’s ‘yes’ votes enable BHS to tackle the issue of an unsustainable lease burden which was weighing heavily on the business.
“While together, the two CVAs comprise only one element of BHS’s plan to turn around its fortunes, they are a critical cog in the mechanism that will put the business in a stronger operational position. The proposal process has given both the company and its creditors the opportunity to agree a compromise that is mutually acceptable.”
More than half of landlords and their investors agreed to reduce rent.
The CVA will see 77 stores undergo no rent change, while 47 stores will pay a reduced rent of 75% or 50%, and 40 will just pay 20% rent. Landlords will be able to terminate such leases if they find other tenants.
It offers a better return for landlords that if it had fallen into administration, as well as seeing a greater number of stores remain open.
CVAs must be agreed by 75% of all unsecured creditors and 50% of the unconnected unsecured creditors before they are passed.
Melanie Leech, chief executive of the British Property Federation, said: “Whilst the CVA will help alleviate some of the short term pressures on the company it is imperative that the owners of the company now raise capital to reinvigorate it.”
The CVA will secure thousands of jobs which rested on the outcome. A CVA allows a business to continue trading but Bhs needs 50% of its landlords and 75% of its creditors to agree to the deal.
The chain’s future is still in doubt as the company needs to raise £100m to stay in business.
It is also negotiating with the Pension Protection Fund over its pension deficit of £571m. The PPF has agreed to abstain from today’s vote. Green is in talks with the pensions regulator about injecting as much as £280m into the fund.
The company has total debts of more than £1.3 billion.
Bhs was bought by billionaire Sir Philip Green for £200 million in 2000, but he sold it last year for just £1 to Retail Acquisitions, a consortium of financiers, lawyers and accountants.