The future of embattled DIY group Focus has been secured after creditors today supported a proposal for a company voluntary arrangement (CVA).
At a meeting held this afternoon in London, more than 99% of creditors voted to pass the CVA on one set of votes for three interlocking companies relating to Focus DIY. On the remaining vote, for stores under the Payless company name, creditors voted 93% in favour.
Securing the CVA means the retailer’s banks will now renew its two-year revolving credit facility. 75% of creditors have to approve the terms for a CVA for it to be passed.
Focus chief executive Bill Grimsey said: “We’re all relieved and pleased the creditors have supported us in this way. Now we can get back to trading, we’ll be a formidable competitor in DIY. We’re here to fight another day.”
He added that the DIY retailer’s 4,700 staff will be “absolutely overjoyed” at the move, which has secured their jobs.
The retailer’s banks had insisted on Focus dealing with its so-called dark store situation – 38 non-trading stores that drained the retailer of £12m a year. 16 of the 38 stores have sub-tenants, while 22 lie completely empty.
As a result of the CVA, Focus will now save £8.6m of the £12m annual cost.
Under the terms of the CVA, Focus will not pay rent, service charges and insurance on the stores. In return, the landlords will receive a share of a £3.7m compensation fund, paid in two equal parts next year.
Focus will continue to pay business rates on the properties until the landlord surrenders the lease or assigns it.
The majority of Focus’s landlords are already accepting monthly rent payments, but as part of the CVA, all Focus’s remaining landlords will also move to monthly rent payment for the next 18 months.
The retailer will return to quarterly payments after this period.