High Street store chain Beales - which has branches in Horsham and Worthing - is seeking a rent reduction from landlords for 14 of its shops to avoid closure. The company has entered into a ‘company voluntary arrangement’ (CVA). Rob Croxen, restructuring partner at KPMG and proposed ‘supervisor’ of the CVA, said: “Founded in 1881, Beales is a familiar face on the high street of many towns and cities up and down the country.
“However, in recent years, the profitability of certain stores has been hampered by expensive legacy leases which were agreed many years ago.
“This CVA seeks to strike a balance which provides a fair compromise to the landlords, while allowing the viable part of the business to move forward.
“It’s particularly important to stress that none of the stores will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full – something which we know from our work on previous CVAs is of critical importance to landlords.”
Colin Haig, restructuring partner at KPMG and second proposed supervisor of the CVA, added: “Across its store portfolio, Beales holds a total of 35 leases. The company also leases offices in Bournemouth and a warehouse in Yeovil, in addition to having a long leasehold on a warehouse in Bolton.
“The CVA essentially divides this portfolio into two categories. For a total of 24 Category 1 sites, which includes the company’s flagship store in Bournemouth, the leases will be retained at current rents which will be paid monthly as opposed to quarterly for three years.
“For the remaining 14 leases, it is proposed that a reduced rent, equivalent of 30 per cent, will be paid for a period of 10 months, while the company engages with landlords to agree the basis of any continued trading from these sites.”
The company needs to secure at least 75 per cent creditor approval for its CVA. A detailed proposal document is expected to be made available to Beales creditors via a dedicated website. The creditors will vote on the CVA on March 24.
KPMG will spend the next three weeks in talks with creditors to ensure they understand the full detail of the proposal.