Continuing the trend of retailers who have managed to secure the votes of their landlords for a CVA (JJB, eg), now Focus (DIY) has been the latest company to succeed. CVAs have proved attractively flexible in the past year or so helping companies to avoid more formal administration procedures and restructuring.
During August 2009, the retailer needed to secure the CVA to be able to renew its two-year revolving credit facility with the bank. The banks wanted Focus to deal with its so-called “dark store situation”. 38 non-trading stores were draining £12m a year from the retailer’s resources.
The CVA means that Focus will now save £8.6m of the £12m annual cost. Under the terms of the CVA, Focus will not pay rent, service charges and insurance on the stores. In return, the landlords will receive a share of a £3.7m compensation fund, paid in two equal parts next year.
