Earlier today (6 January) it was confirmed that Chilango’s founders Dan Houghton and Eric Partaker had stepped down from their roles as co-CEOs of the business, with the latter remaining in his role until a new managing director is hired.
However, in contrast to initial reports, a spokesperson said the pair’s decision to quit was made separately from the CVA process, and not due to pressure from shareholders.
Chilango, which was founded in 2007, filed for a company voluntary arrangement (CVA) in December.
It previously raised £5.8m from around 1,500 retail investors through two mini-bonds, dubbed ‘burrito bonds’, in 2014 and 2018, which allowed investors to purchase some of the company’s debt for a set period of time, in exchange for fixed interest payments.
As part of the brand’s financial restructuring process, investors were offered the choice between a debt-for-equity swap or a settlement of bondholders’ debts at 10p per pound invested, according to the Financial Times.
Last week it was confirmed that enough shareholders had backed the proposal to transfer the debt into preferred shares, which will see them receive an 8% annual dividend that will accrue, but only be paid if Chilango is sold or if its management approve a payment.
“We are humbled to have received such strong support from our creditors and shareholders, and appreciate how pragmatic and understanding our stakeholders have been,” says Houghton and Partaker, who remain as non-executive directors and major shareholders in the business.
“While Chilango remains profitable at the restaurant level, with three consecutive years of +6% like-for-like sales growth, the CVA enables the company to exit non-trading leases, reduce rents in select locations, and restructure the repayment profile of the company’s debt.
“Together with a reduction in central costs, the successful CVA will materially improve the balance sheet, and also make the business both EBITDA and cash flow positive at a group level.
“After more than 10 years, Chilango has an estate of some of the most prime locations in London, a thriving restaurant in Manchester, and a newly opened restaurant in Birmingham. All these factors combined, together with our amazing restaurant teams, most certainly drive the strong, continued sales growth in our restaurants.”
Chilango currently operates 12 restaurants across London, Manchester and Birmingham.