Blacks has finalised the terms of a restructuring plan that has saved 4,000 jobs, although the British Property Federation has complained that landlords had very choice in the matter.
The outdoor retailer’s company voluntary arrangement has been supported by Lloyds Banking Group and received the backing of landlords of Blacks’ closed or closing stores.?As part of the CVA, £7.25million has been made available to landlords of the 101 stores, which equates to approximately six months rent.
Says Blacks’ chief executive, Neil Gillis: “After several years of losses, Blacks embarked in a turnaround plan in early 2008. That plan successfully reduced the cost base of the business, reduced our working capital requirements, improved retail standards and created a successful new retail format.
“However, the severity of the current trading environment and the drag of the loss-making boardwear business has required a more radical set of measures to complete the turnaround of the business.
“The restructuring plan announced and the new banking facility supporting it provide a realistic opportunity to ensure the survival of the core outdoor business, which has the potential to become a strong successful retailer.”
The CVA was announced on the first anniversary of Woolworths’ demise and at a time when Borders’ future looks uncertain.
Liz Peace, chief executive of the British Property Federation, said that while the BPF was pleased that by agreeing the CVA landlords have managed to save 4,000 jobs, the organisation that represents the interests of those involved in property ownership and investment was concerned that the favourable terms of the CVA treat some retailers differently from others.
“In all the CVAs we have seen, the driver behind them has been the banks, who have demanded that the retailers shed underperforming stores if they wish to continue,” says Peace.
“Its understandable that banks should look at things from an investment perspective rather than from a retailing one, but what this means is that CVAs will only be a way of mazimising someone’s investment, rather than be a fair way of sharing the pain.
“While the CVA has been transparent and covered landlords’ empty rates payments on closed stores, it has not taken any bite out of shareholders’ or other creditors’ pockets. Landlords have borne all the pain, and when you consider that many of our pension funds are invested with them, it is clear that this is not fair.”