Relevant Document:KPMG statement
U.K. discount retailer Poundstretcher has today launched a Company Voluntary Arrangement, or CVA, proposal, according to a statement from its advisors KPMG.
The retailer is using the CVA as part of a wider turnaround plan that seeks to restructure its U.K. store portfolio, stem losses from underperforming outlets, realign head office costs and allow for investment in its core estate and product offering, the statement said.
“Poundstretcher has suffered from significant impacts to profitability on several fronts over a sustained period, which were then further exacerbated by the impact of Covid-19 on footfall,” KPMG partner Will Wright said.
The CVA proposal divides the store portfolio into three categories as follows:
- For a total of 94 stores, the leases will be retained at current rents;
- 84 stores will see rents reduced by between 30% and 40%, for a period of three years;
- 253 stores will see rents paid in full for an initial period of six weeks, after which continued trading will depend on the commercial merits of each store with the relevant landlords’ collaboration.
The company occupies a further 23 stores under leases where the tenant is a connected company, Poundstretcher Properties Limited. It is the directors’ intention to place this company into administration prior to the decision date of the CVA.
Poundstretcher needs to secure at least 75% creditor approval by value for the CVA to proceed. Detailed proposal documents will be made available to creditors via a dedicated website today, KPMG said.
Creditors will have until July 2 to vote on the CVA. Consultations have already taken place with key creditors and KPMG will spend the coming weeks in further talks with key creditors to ensure they understand the full detail of the proposal, it said.