Launch of CVA for the Leisure estate

RNS Number : 4606P

Restaurant Group PLC

10 June 2020

 

The Restaurant Group plc

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Leisure estate restructure

The Restaurant Group plc ("Group" or "TRG") today announces a proposal to reduce the size of its Leisure estate and rental cost base by the implementation of a company voluntary arrangement ("CVA").

Launch of "CVA" for the Leisure estate

The CVA will relate to the statutory entity "The Restaurant Group (UK) Limited" ("TRG UK Ltd") which principally comprises the Frankie and Benny's estate (details of the estate profile for this entity are included in the notes section below).  The arrangements will have no impact on the Group's Wagamama, Airport Concessions and Pub operations.

The CVA will provide a mechanism to restructure the Leisure estate in line with the plan outlined in the Group's last market update (on the 8^th April 2020) by reducing the current portfolio by exiting approximately 125 trading sites as well as seeking improved rental terms on a portion of the remaining trading estate.

Assuming the CVA is approved and successfully implemented, this will leave a remaining trading estate in the Group's Leisure business of approximately 160 sites.  The CVA will also include a mechanism to exit approximately 25 previously closed Leisure sites, thereby further reducing the existing onerous lease provision held on the Group's balance sheet.

The proposals reflect TRG's proactive approach to ensuring a long-term sustainable business for all stakeholders in the face of unprecedented disruption to the UK's casual dining sector.  The CVA will not seek to compromise claims of any creditors other than certain landlords, and inter-company liabilities.  The rights and entitlement of all trade suppliers, HMRC and employees will not be affected by the proposals.

Commenting on the announcement, Andy Hornby, Chief Executive said :

"The issues facing our sector are well documented and we have already taken decisive action to improve our liquidity, reduce our cost base and downsize our operations.  The proposed CVA will deliver an appropriately-sized estate for our Leisure business to ensure we are well positioned despite the very challenging market conditions facing the casual dining sector.  I would like to wholeheartedly thank all of my TRG colleagues for their continued understanding and extraordinary commitment during this unprecedented period."

Melanie Leech, Chief Executive, British Property Federation (BPF) comments:

" These situations are never easy, particularly now for the retail and hospitality businesses on our high streets at the sharp end of the Covid-19 pandemic.  Property owners, however, need to take into consideration the impact on their investors, including the millions of people whose savings and pensions are invested in commercial property, as they vote on any CVA proposal. 

"The Restaurant Group and Alix Partners engaged with the BPF before launching this CVA proposal. This has provided us an opportunity to improve understanding of property owners' interests and concerns, but ultimately it will be for individual property owners to decide how they will vote on the CVA."

Summary of CVA proposal

· A comprehensive review of the Leisure estate portfolio has identified approximately 210 trading sites that are either:

-  underperforming;

-  on unfavourable lease terms;

-  or, in certain cases, not expected to generate future profitable returns going forward, or;

-  subject to a combination of all three above factors

Of these, approximately 125 sites have been identified for closure in the short term under the CVA proposal, with the balance of 85 sites being subject to a reduction in rental costs and revised lease terms

· There are approximately 65 Leisure trading sites which will be unaffected by the CVA

· The CVA will not seek to compromise claims of any creditors other than certain landlords, and inter-company liabilities.  The rights and entitlement of all trade suppliers, HMRC and employees will not be affected by the proposals

· The CVA will be proposed by TRG UK Ltd, a subsidiary of TRG. The CVA will not affect the current ordinary course operations of the rest of the Group (i.e. the Group's Wagamama, Airport Concessions and Pub operations) and the Group continues to trade as a going concern

The nominees for the CVA will be Clare Kennedy, Peter Saville and Catherine Williamson of AlixPartners LLP.

The attendant creditors' meeting in respect of TRG UK Ltd is scheduled for 29^th June 2020.

Enquiries:

The Restaurant Group plc Andy Hornby, Chief Executive Officer Kirk Davis, Chief Financial Officer Umer Usman, Investor Relations	0203 117 5001
MHP Communications (Financial PR adviser) Oliver Hughes / Simon Hockridge	07885 224 532 / 07709 496 125

Notes

1.  A CVA, or company voluntary arrangement, is a legal process that allows a company to reach a compromise or settlement agreement with some or all of its creditors, i.e. those to whom money is owed. The majority of CVAs are structured to close stores, reduce rents and change lease terms with their landlords

2.  The statutory entity "The Restaurant Group (UK) Limited" ("TRG UK Ltd") as at 9^th June 2020 comprised of the following trading sites in the Group's Leisure business:

o  226 Frankie & Benny's

o  13 Chiquito

o  35 Other Leisure brands (i.e. Coast to Coast, , Garfunkel's, Filling Station, Firejacks & Joe's Kitchen)

The statutory entity also includes 3 Concessions sites

IMPORTANT NOTICE

This announcement may include statements that are, or may be deemed to be, "forward-looking statements".  These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions.  Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect TRG's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to TRG's business, results of operations, financial position, liquidity, prospects, growth and strategies.  Forward-looking statements speak only as of the date they are made. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future or are beyond TRG's control.

The person responsible for arranging the release of this announcement on behalf of TRG is Kirk Davis (CFO).

 

END

 

 

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