KPMG has been appointed as CVA ‘supervisor’ to a historic Bournemouth-based department store chain.
Beales, founded in 1881, wants to renegotiate its current rent agreements with its landlords.
A meeting of creditors will be held on 24 March to approve the proposals. Landlords of all the loss-making stores will be asked to reduce Beales’ rents or take the premises back.
Beales chairman Stuart Lyons said: “Most of Beales’ stores are profitable including our flagship stores in Bournemouth and Poole, which are unaffected by the proposal. However, a minority of our stores lose money because leases agreed some years ago are no longer sustainable due to changes in the economy and local conditions.
“These legacy rents have been dragging the group down. This is a unique opportunity to restore the group to financial health.”
With 29 department stores across the country, Beales was bought in April last year by businessman and UKIP supporter Andrew Perloff, whose company Panther Securities is also landlord to a dozen of its stores. It is supporting the CVA. Beales said that buying group and its largest supplier, Associated Independent Stores, is also supporting the move.
Rob Croxen, restructuring partner at KPMG, 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 One 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 ten 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% creditor approval for its CVA to get the thumbs up.