Byron it set to conclude its previously negotiated financial restructuring after the group’s Company Voluntary Agreement (CVA) proposal was overwhelmingly approved by its creditors.
The approval of the CVA, which is a key step in the company directors’ turnaround plan, could see up to 20 of the brand’s 67 sites closed, but chief executive Simon Cope said “With the support of our new owners, Three Hills Capital, I’m confident that a new Byron can begin to take shape”.
The CVA needed at least 75% backing from creditors, which included landlords, and 99% voted in favour. Byron employs about 1,800 staff.
The CVA proposed that 51 Byron sites keep the same rental costs, and five will have their rents reduced by a third. A further 20 will have their rents reduced by 45% for six months while the group negotiates with landlords over the future of those sites.
In total, Byron has 67 operating restaurants, and nine leases on non-operational sites.
Byron was founded in London in 2007 and sold to private equity group Hutton Collins Partners in October 2013 for £100m.
As part of the restructuring process, investment house Three Hills Capital Partners will become the biggest shareholder by buying half of Hutton Collins’ stake.
No outlets will close immediately, said KPMG, the accounting firm handling the restructuring. Employees, suppliers and business rates would continue to be paid on time and full, KPMG said
Cope said: “We are very pleased to have such strong support from our creditors. Our landlords have been both understanding and positive throughout this process and we look forward to working proactively with them in the coming months. As a result of this restructuring process, a number of our restaurants will close and we will do everything possible to redeploy staff to other sites and initiatives.
“With the support of our new owners, Three Hills Capital, I’m confident that a new Byron can begin to take shape. Byron’s brand and offer remains strong and distinctive, and with a smaller and more efficient restaurant estate we can continue to provide an outstanding burger experience for our customers and to develop and grow a sustainable and innovative business for the long term.”
The CVA proposal document for Byron showed that company’s like-for-likes sales declined 17% in the final two weeks of its 2017 financial year, and tracked at an average of -5.9% during the entire 12-month period.
As at 10 December 2017, the business had seen a further decline in like-for-like sales in its current financial year, in which year-to-date like-for-like sales are averaging -4.4%.
Revenue for the group’s 2017 financial year stood at £88m, up from £80.4m the previous year, however it posted a loss of £10.3m against a profit of £91k the year before.
The document seen by MCA shows that the offer by Three Hills Capital Partners (THCP), an existing shareholder in Byron, to become the new majority shareholder in the business was conditional on the CVA receiving approval and on the group’s secured lenders (understood to include Santander) agreeing to write-off c£21m due from the company out of a total of £46m.
The 20 sites under threat of closure include sites in Birmingham, Bristol, Cardiff, Manchester Deansgate and London’s Spitalfields. It also includes two sites that are yet to open, in Stratford-upon-Avon.
It is thought that up to four leases could revert to the Azzurri Group, including sites in Westbourne Grove and Hoxton Square, whilst the lease in Spitalfields will revert to Ping Pong.
A further five sites identified as being viable at a reduced rent, equivalent to two thirds. These sites are in Bromley, Exeter, Kingston, Leeds and Milton Keynes.
It also includes four sites that Byron had already agreed to lease in Plymouth, Eastbourne, Watford and Reading.
The 20 sites closed or under threat of closure are in:
Gateshead Metrocentre (closed)
Manchester Corn Exchange (closed)
Store Street (London)
Stratford-upon-Avon (not opened)
Worcester (not opened)