- Friday, April 19, 2024
By: Pramod Thomas
UK billionaire brothers Mohsin and Zuber Issa have launched a takeover bid for the ailing coffee shop chain Caffe Nero.
Reports said that the brothers have written to Caffe Nero’s founder and owner Gerry Ford over the weekend with a proposal.
Landlords would be fully reimbursed for any arrears owed by Caffe Nero during the pandemic under the offer and the deal is likely to be funded with existing cash reserves, reported The Telegraph.
The offer was a significant improvement on creditors’ plans to launch a company voluntary arrangement(CVA)-a formal procedure which can give a viable business the chance of recovery.
It sets out how repayments of company debt should be made to creditors and can deliver a better outcome than an administration or liquidation.
With the help of an insolvency practitioner, directors will put together a feasible CVA proposal to be put to creditors. After 14 days creditors are asked to vote and at least 75 per cent must agree.
Under the CVA proposals, Caffe Nero’s landlords are set to get 30p for every £1 worth of rent they are owed.
Caffe Nero has around 800 stores across the UK and employs 6,000 people. The coffee chain has suffered a hit to trade since the pandemic forced the country into its first lockdown in March.
It recorded sales growth of 9 per cent to £366 million for the year to May 2019. But, losses rose from £7.2m to £31.5m after a £14.5m charge related to its purchase of Welsh coffee chain Coffee#1.
Issa Brothers bought Asda, Britain’s third largest supermarket, for £6.8 billion in September, from Walmart in a deal backed by private equity firm TDR Capital.
They were made CBEs in the Queen’s birthday honors list for services to business and charity after turning EG Group into a network of almost 6,000 forecourts across 10 countries over the past 20 years.
Just a few weeks after the Asda deal, the brothers have sold a stake in their EG Group to two Canadian pensions funds and Abu Dhabi’s sovereign wealth fund.
