Monsoon Accessorize has published its CVA proposal calling for rent reductions at 135 stores in exchange for £30m in funding and a £10m annual profit-sharing scheme.
The retailer said it was seeking two CVAs – one for each brand – that would aim to slash rents at 135 of Monsoon and Accessorize’s leased stores.
The embattled fashion chain said founder Peter Simon had already provided a £12m emergency credit facility on a secured basis and agreed to provide a further £18m at 0% interest to help turn round the business, “conditional upon the CVAs passing and not being subject to a successful challenge”.
Monsoon also confirmed it would be offering a profit-sharing scheme whereby landlords could receive up to £10m annually if the retailer can “trade profitably and above forecast in future years”.
Simon also agreed to slash the rent on the retailer’s head office in West London, which he owns, by 50% to help reduce overheads.
The company reiterated that it would not be looking to close any stores across its estate as part of the CVA, but would instead be looking to reduce the size of some stores.
Chief executive Paul Allen, said: “Trading for the group has been difficult for some time, as it has been for much of the retail industry. This is due to a combination of factors including rising costs, increased competition and subdued consumer spending.
“In early 2016, we implemented a plan that initially delivered positive like-for-like store sales. However, in the two years that followed, overall like-for-like sales have decreased as market conditions declined.”
“As a result, we are now taking further action to reshape the businesses for the future. Although the group has no external debt, the current rate of sales decline and recent working capital pressures have had a material impact on the group liquidity position, particularly at the low point in the working capital cycle during the financial year.
“The proposed CVA is designed to reduce store operating costs and to bring the costs more in line with market rents. Through implementing the CVA and the shareholder credit facility, the group will be able to invest in the business, the brands and in growing profitable sales channels – both in stores and online.”
He said the business had made “great strides” in improving its offer and would continue to grow its ecommerce channel.
Creditors will be called to vote on Monsoon’s CVA proposal at a meeting on July 3.