Caffè Nero approves CVA following failed takeover approach

The approved plan coms with a modification that the company will ensure compromised creditors, including landlords, will have their arrears paid in full in the event that a sale of the group to the third party occurs within the next six months.

It comes after Caffè Nero rejected a takeover bid​​ from petrol forecourt operator EG Group earlier this week.

Nero said the CVA proposal received the support of an 'overwhelming majority' of landlords.

“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 how many of Nero’s 650 cafes are at risk of closure following the CVA, though it is understood the focus of the plan will be to switch to a turnover rent model.

Billionaire brothers Mohsin and Zuber Issa, who own EG, have warned Nero that its proposed restructuring would face a legal challenge after the coffee shop chain snubbed their offer.

According to Sky News​​, ​lawyers for EG Group have written to Caffè Nero’s parent company to highlight the likelihood of a landlord rebellion against CVA.

Under the CVA, which is being run by KPMG, landlords face losing the majority of the rent arrears they are owed, while EG promised to pay them in full - a sum understood to be worth tens of millions of pounds.

Caffè Nero dismissed EG's bid as 'an unsolicited, highly uncertain approach'.

The chain said: "Any transaction would be subject to a period of detailed due diligence, as well as the agreement on the terms of any sale, and would require the consent of the group’s external lenders and shareholders."