Roasted: Caffe Nero rejects Issa brothers bid in favour of CVA
Caffe Nero has rejected a bid from the Issa brothers, the billionaire owners of petrol station chain EG Group, in favour of pursuing a company voluntary arrangement.
Mohsin and Zuber Issa, billionaire brothers who recently bought a majority stake in Asda with backing from TDR Capital, this weekend made an offer to buy the chain from Caffe Nero founder Gerry Ford, Sky News reported.
Caffe Nero this evening rejected the proposal, which would have seen landlords paid in full for the rent bills owed to them, and instead said it would continue to pursue a restructuring agreement.
“The directors are fully aware of their responsibility to maximise recovery to creditors,” Caffe Nero said in a statement.
“Having considered carefully whether progressing with this unsolicited, highly uncertain approach has the potential to achieve a better result for creditors than the company voluntary arrangement (CVA) as currently proposed, they do not believe this to be the case or to be in the long term interests of the group.
“This offer has been made without any understanding of Caffe Nero’s financial and trading position.
“Furthermore, any transaction would be subject to a period of detailed due diligence, as well as the agreement on the terms of any sale, and would require the consent of the group’s external lenders and shareholders.
“Therefore, it is unlikely that any transaction will be agreed, resulting in an outcome for creditors that is far inferior to the current CVA proposal.”
Caffe Nero stakeholders will vote on the company voluntary arrangement (CVA) this evening.
If it is approved, the company will move its 800 UK stores to a turnover based rental agreement.
The result will be announced tomorrow morning.
The high street cafe chain has appointed KPMG to advise on the CVA following the introduction of a second coronavirus lockdown.
Chief executive Gerry Ford, who founded the business in 1997, said earlier this month that the second lockdown meant it was “imperative that we take further action” and it had “little option…to safeguard the future of our business.”
“Prior to Covid-19, the business had been trading strongly, and had achieved 83 consecutive quarters of sales growth,” Ford said.
“However, like so many businesses in the hospitality sector, the pandemic has decimated trading, and although we had made significant progress in navigating the financial challenges of the first lockdown, the second lockdown has made it imperative that we take further action.”