Tragus Group has announced that the Company Voluntary Arrangements (“CVA”) initiated on 4th June 2014 have been approved by the required majority of creditors. There was strong support from landlords, who made up the largest group of unconnected creditors, with over 80% voting in favour of the terms.
The CVAs will pave the way for a significant reorganisation of the business, reducing the Group’s debt burden and securing the right operational structure for the business, in order to provide the necessary capital needed to revitalise its core brands, Bella Italia and Café Rouge, and ensure a long-term sustainable future for the business.
Creating a more operationally efficient business
Tragus Group CEO, Steve Richards, commented:
“We are pleased that creditors have accepted our proposals to create a more operationally efficient business. The future looks bright for Tragus and we are now able to focus on investing in and revitalising the Bella Italia and Café Rouge brands and pushing ahead with the sale of Strada. We already have plans in place to open twelve new Bella Italia restaurants over the next year and expect over fifty more restaurants to open over the next five years.”
Best outcome for all stakeholders
Zolfo Cooper’s Restructuring Services team have been appointed as Joint Supervisors of the Company Voluntary Arrangements, and Peter Saville commented:
“The CVAs were carefully designed to provide the best outcome for all stakeholders and we are delighted that the proposals have been approved by such a large number of creditors. The approval of the CVA proposals will create a more sustainable business and we are pleased to see such a high level of support from the Group’s landlords. This enables Tragus to restructure its business for a sustainable future and to preserve jobs by focusing on a more profitable core estate.”
Strada
Concurrent with the CVA process, Zolfo Cooper also started a process designed to secure new equity for the Group’s Strada business, which comprises 56 sites nationwide. Paul Hemming, a Corporate Finance partner in Zolfo Cooper’s Advisory Services practice and head of the firm’s leisure industry team, commented: “Since we started the process earlier this month, we have had a large number of highly credible expressions of interest. We will continue the process, working towards the best outcome for all stakeholders. This should be achieved by the end of the summer.”
About the Restructuring
CVA – A total of 150 properties being retained at current rents, which will be paid monthly as opposed to quarterly for the CVA period only.
CVA – 19 properties will be retained but with rent reduced to 60% of current levels, which will be paid monthly as opposed to quarterly for a period of two years.
CVA – 32 properties will have rent reduced to 50% of current levels for a period of three months, which will be paid monthly as opposed to quarterly.
CVA – A compromise payment will be made to landlords where rents levels have been reduced.
Tragus has agreed a financial restructuring to reduce its debt burden by around £263m and put in place new term loan facilities.
Restructuring will provide an opportunity to improve Group operational efficiency and revise its cost base.