Credit deal saves Focus DIY store collapse
August 26, 2009
Reading-based DIY chain Focus has agreed a rescue deal which will save around 4,500 jobs.
The firm’s creditors – consisting mainly of landlords – have backed a company voluntary agreement (CVA) in a bid to stop the firm collapsing into administration.
The move will see Focus, which has branches in Reading Retail Park, Oxford Road, and Reading Road, Winnersh, pay its creditors a portion of what it owes them while leases for empty stores will be sold off.
This will allow the struggling chain, which has been crippled by mounting debts and dwindling sales, to safeguard all 4,572 jobs across its UK operations. The DIY group currently operates 180 stores and support centres nationwide, although its 38 closed outlets are said to be haemorrhaging £12 million a year in rent.
Chief executive Bill Grimsey said: “We are very pleased. With this CVA now firmly behind us we can concentrate on managing our existing open stores.
“If we weren’t in recession, Focus could be making over three times what we are today.
“The flexibility of our landlords will save thousands of jobs and that’s why we owe it to them to be wholly transparent in all our dealings.”
Landlords including property giants British Land and Aviva overwhelmingly agreed to back the insolvency plan at a creditors’ meeting on Monday.
The Focus CVA will see leases for empty stores bought off with two lump sums equivalent to six months’ rent.
While the payout – worth about £6 million – is less than the lease values, it is more than they would get if the firm went under.
Focus – bought by the US private equity firm Cerberus in 2007 – also wants the landlords to accept monthly rather than quarterly rent payments until March 2011.
The process would also see Focus’s lenders provide a two-year extension to the firm’s £50 million revolving credit facility, due at the end of this year.