Town Centre Restaurants (TCR), the operator of eateries within UK shopping centres, completed a restructuring of its business earlier this year, but could potentially breach its new covenants due to adverse trading conditions. The c.60-strong group, which is led by Mark Winter, breached its banking covenants last July and entered discussions with its lenders and shareholders to restructure its current debt facilities. As reported by M&C Report at the time, it also entered into talks with its landlords to reduce its rental obligations on a number of sites. The company, which operates the Café Giardino concept, said it had successfully negotiated revised agreements on its debt levels that provided the group with long-term committed facilities and reduced its future rental charges. It said that under the new terms of the agreements it had projected group forecasts showing that management will be able to slow the like-for-like sales declines that the group has experienced in recent years. The group said that the initial results of the measures taken at an operational level, including the redesign of outlets, were encouraging on alike-for-like basis. However, in accounts filed at Companies House, the company said that margin of facilities and covenants “over requirements is not large, and therefore, any adverse variance on trading or interest rates may result in a potential breach of covenants”. The group, also operates the Auberge and Azzuro formats, saw it pre-tax losses narrow in the 52 weeks to 31 January 2011, from £9.358m to £5.982m, while its operating losses were reduced from £6.037m to £1.360m. Turnover dropped from £23.257m in the previous year to £21.456m, while Ebitda increased slightly from £1.414m to £1.419m. It said: “The directors’ consider that the outlook presents significant challenges in terms of sales volume and pricing as well as operating costs. In additions, the group’s borrowing costs are currently linked to the Libor rat, and therefore, any future increase in interest payable would also present a significant challenge.”