Creditors for British Home Stores (BHS) today voted in favour of a Company Voluntary Arrangement (CVA) to cut rental costs across 123 of its 164 stores. The agreement also includes plans to sell its flagship store on Oxford Street for around £30m, reports the BBC.
The retailer divided its stores into three groups based on profitability. Under the terms of the CVAs, 77 stores will be unaffected, a reduction in rent is being sought for 47 "viable" stores, while 40 stores will continue to trade for a minimum of 10 months whilst negotiations with landlords are undertaken to reduce the rents substantially.
95% of its creditors agreed to the deal, saving the retailer from administration, yet acknowledging the need for additional funding should it wish to trade beyond 25th March. There will be a second vote this afternoon on rent reductions for a further 23 stores.
Chief executive Darren Topp comments: "On behalf of all at BHS I would like to thank our creditors and landlords for voting in favour of supporting this CVA. This gives BHS the opportunity to move forward and we can now continue with the updated turnaround plan that was announced when Retail Acquisitions purchased the group in March last year. It is a tough time for retailers across the UK with huge structural challenges faced by all, however, we have a very credible plan to return BHS to growth and profitability and a revitalised BHS will emerge as we accelerate our turnaround plans."
The retailer, owned by consortium Retail Acquisitions, has debts of over £1.3bn, including a pensions deficit of £571m. The biggest creditor, the Pension Protection Fund, elected not to vote, giving the company and landlords time to address the problem before it calls in its debt.
