Burger chain Byron puts jobs and restaurants at risk in proposed restructuring
The restaurant group is looking agree a company voluntary arrangement to help put it on firmer financial ground.
Hundreds of jobs are under threat at Byron after the stricken burger chain put 20 restaurants at risk of closure as part of a proposed restructuring package.
The burger chain is looking to agree a company voluntary arrangement (CVA) to help put it on firmer financial ground by securing hefty discounts on rental costs.
A CVA allows a business to close loss-making stores and was recently used by embattled toy retailer Toys R Us.
Accountancy giant KPMG, which is handling the process, said Byron’s directors were using the move to secure the company’s future amid “gathering economic headwinds”.
However, it would need to win the backing of landlords and creditors before pushing forward with the process.
Will Wright, restructuring partner at KPMG, said: “Over the last 10 years, Byron has grown to become a stand-out name within the UK’s casual dining sector.
“However, in recent times, certain parts of its portfolio have not met expectations, and with gathering economic headwinds starting to impact the sector more profoundly, the directors embarked upon a strategic review of the business as a means of safeguarding its long-term future.”
KPMG said no restaurants will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full.
If the CVA is approved, 51 Byron sites would keep their rental costs the same and five would have their rents reduced by a third.
A further 20 would have their rents cut by 45% for six months while the group holds crunch talks with landlords over the future of these sites.
Investment house Three Hills Capital Partners would also become the biggest shareholder in the group as part of a sale process linked to the CVA.
It would see Hutton Collins offload half of its stake to Three Hills , but hold onto a minority share of the business.
Mr Wright added: “As part of this strategic review, the directors have been successful in negotiating a financial restructuring with the company’s lenders and shareholders, which will enable new investment to come into the business.
“Completion of this financial restructuring is conditional on the approval of today’s CVA proposal, which is designed to tackle the cost of the company’s leasehold obligations across its UK restaurant portfolio.
“As with similar CVAs, this arrangement seeks to strike a balance which provides a fair compromise to landlords, while allowing the viable part of the business to move forward across a smaller, more profitable core estate.”
Byron, which was founded by Tom Byng in 2007, employs around 1,800 people and has 67 leasehold restaurants and nine non-operational leasehold sites across the UK, including its head office in London.
Simon Cope, Byron chief executive, said: “Byron’s core restaurant business and brand remain strong but the market that we operate in has changed profoundly.
“In order to continue serving our loyal customer base, we need to make some critical and difficult changes to the size and shape of our estate.
“With the support of our new owners, our creditors, landlords and other business partners, I’m confident Byron will able to continue providing our consumers with the best burger experience.
“The teams in our restaurants are always such an inspiration and we will work hard to support them throughout this difficult process.”
Byron will need 75% backing from creditors if the CVA is to succeed, with the vote taking place on January 31.