Caffe Nero CVA approved

02 December 2020

Caffe Nero’s rescue deal has been approved, allowing the coffee shop chain to renegotiate rental agreements for its UK stores.

The company said that more than 90 per cent of creditors, including landlords, had given the green light to the company voluntary arrangement (CVA) proposals.

It will allow Caffe Nero to move its leases to turnover-based rental agreements, which links the amount charged by landlords to sales levels.

Nero welcomed the CVA proposal.

“The directors are extremely grateful to its landlords, business partners, suppliers and other creditors for their support and understanding in the process during these challenging times," said a spokesman for the group.

“After the devastating effect caused by the pandemic on Caffè Nero, the approval of this CVA by the company’s creditors safeguards the immediate future of the business, and provides a sustainable platform from which the company can navigate the challenges ahead, and rebuild sales momentum over the medium to longer term.”

It is not clear yet how many of Nero’s 650 cafes are at risk of closure following the CVA.

As well as its Caffe Nero business, the company also operates 150 stores brands Coffee#1 and Harris + Hoole, which are not part of the CVA.

The CVA proposal included a modification that ensures compromised creditors will have their arrears paid in full if the cafe group is sold to a third-party.

The change to the details of the restructuring agreement came after Caffe Nero rejected a bid by billionaire brothers Mohsin and Zuber Issa, who recently bought a majority stake in Asda with backing from TDR Capital.

Yesterday Sky News reported that EG Group, the petrol station retail chain owned by the brothers, had warned the company that it would face a legal challenge over its CVA.