Latest news with #rentcuts
Telegraph
3 days ago
- Business
- Telegraph
River Island averts collapse after defeating Mike Ashley in rent cut battle
River Island has avoided collapse by securing court approval for its controversial restructuring plan, as it defeated fierce opposition from landlords including Mike Ashley's Frasers Group. The retail giant successfully overcame resistance from landlords to force through rent cuts during a hearing on Friday, as a High Court judge ruled that radical action was needed to help the business survive. As well as Frasers, property giant Landsec had also opposed the restructuring plan owing to its ownership of affected stores. In his ruling, Mr Justice Norris accepted that the turnaround plan was necessary to 'bridge a funding gap'. It came as River Island revealed during the court hearing that it plans to cut 110 head office jobs this month to save £8.1m in costs. The court approval means the fashion retailer has gained a crucial lifeline, allowing it to unlock a loan from its founders, the billionaire Lewis family, to avoid collapsing into administration. It had warned that without a radical turnaround to write off store rents and debts, it would essentially run out of money by September, as previously revealed by The Telegraph. However, the proposal was opposed largely by landlords because it involves sweeping rent cuts for parts of its 230-store estate. The plan also affects local councils across the country, with River Island able to walk away from millions of pounds owed in business rates. River Island had gained the support of around 80pc of its creditors by value following a vote last Friday. However, final approval for its rescue plan rested with the High Court because only half of all creditor classes backed the plan. Support was required from at least three-quarters of each class in order for the court to wave through the proposal. Its creditors were grouped into 10 categories, including landlords and councils. As well as Frasers and Landsec, affected store owners include British Land, the Crown Estate and Legal & General. 'Strong platform' Following Friday's decision, Ben Lewis, chief executive of River Island, said: 'We are pleased that River Island's restructuring plan has been approved by the High Court. 'We have a clear transformation strategy to ensure the long-term viability of the business, and this decision gives us a strong platform to deliver this. 'Recent improvements in our fashion offer and shopping experience are starting to show results, and the restructuring plan will enable us to align our store estate to our customers' needs. 'We are grateful to our suppliers, landlords and other stakeholders for their constructive engagement and shared confidence in River Island's future.' As one of Britain's best-known fashion chains, River Island was founded by Bernard Lewis, 99, and his brother David in 1948. Their first shop was in Hackney, East London. The family fortune is estimated at £2.7bn, with a property portfolio that includes a luxury hotel in Palm Beach, Florida. Bernard's nephew Ben rejoined the business as chief executive earlier this year, having started as a store manager in 1990 before leading the business from 2010 to 2019. The Lewis family had agreed a fresh £40m borrowing facility through their investment company, Blue Coast Capital, provided that its turnaround plan goes ahead. Blue Coast is its biggest lender, with debts totalling £270m. The restructuring comes after a raft of shop closures at other high street retailers, including at Original Factory Shop and Hobbycraft. Landlords are also steeling themselves for scores of Poundland store closures in the coming weeks.
Telegraph
07-06-2025
- Business
- Telegraph
Poundland plots rent cuts in battle for survival
Poundland bosses are hatching a plan to enforce steep rent cuts on store landlords as part of a last-ditch bid for survival. The discount retailer has earmarked hundreds of stores for sharp rent reductions as its Polish parent company looks to persuade new owners to take the chain off its hands. An auction of Poundland has been whittled down to a shoot-out between the distressed investment funds Gordon Brothers and Hilco. The winning bidder will inherit a radical new turnaround plan drawn up by senior management, which proposes taking the axe to Poundland's sprawling estate of more than 800 stores. Between 150 and 200 have been singled out for imminent closure with as many as 500 more selected for swingeing rent bill decreases as bosses seek to dramatically rein in costs. Poundland employs 16,000 people. It is understood the company hopes to impose reductions on landlords of anywhere between 10pc and 50pc, while pulling out of scores of other sites via a court-sanctioned restructuring scheme. However, there is no guarantee that a judge will approve the proposal. A source familiar with the situation said any future decisions on rents would be for a potential new owner. Such extreme steps are usually attempted via an insolvency process known as a company voluntary arrangement in which landlords are handed a vote on any cost-cutting measures that will affect them. Barry Williams, the retailer's former managing director, was parachuted back on to the board at the beginning of the year to help address Poundland's spiralling crisis. Pepco crashed to a £548m loss in December after taking a £650m write-down on its UK operations. It blamed a 'significant decline in performance' as well as spiralling costs at Poundland for the setback. Under new owners, closures are expected to be accompanied by a huge cash injection as they seeks to turn around Poundland's dwindling fortunes. Prospective backers anticipate having to immediately pump in between £70m and £100m to stabilise the company. Those involved in the talks say Poundland's advisers at Teneo hoped to have entered exclusive talks with one of the remaining bidders this week. However, the timetable appears to have slipped, prompting speculation about whether investor appetite had waned as result of the funds needed to turn the retailer around and concerns over the complexity involved. There are also worries that trading at Poundland has continued to deteriorate, exacerbating its precarious situation. Last month, Pepco told investors not to expect 'major proceeds' from any sale of Poundland. It also warned that the chain might not make a profit in the forthcoming financial year. The business continued to face 'highly challenging trading conditions' in the six months to the end of March, it said. Like-for-like sales were down 7.3pc and pre-tax earnings slumped three quarters to €22m (£18.6m). A Pepco Group spokesman said: 'The focus of the group and advisers is currently on a potential sale of Poundland. This is an ongoing process and no final decisions have been taken.'
Yahoo
07-06-2025
- Business
- Yahoo
Poundland plots rent cuts in battle for survival
Poundland bosses are hatching a plan to enforce steep rent cuts on store landlords as part of a last-ditch bid for survival. The discount retailer has earmarked hundreds of stores for sharp rent reductions as its Polish parent company looks to persuade new owners to take the chain off its hands. An auction of Poundland has been whittled down to a shoot-out between the distressed investment funds Gordon Brothers and Hilco. The winning bidder will inherit a radical new turnaround plan drawn up by senior management, which proposes taking the axe to Poundland's sprawling estate of more than 800 stores. Between 150 and 200 have been singled out for imminent closure with as many as 500 more selected for swingeing rent bill decreases as bosses seek to dramatically rein in costs. Poundland employs 16,000 people. It is understood the company hopes to impose reductions on landlords of anywhere between 10pc and 50pc, while pulling out of scores of other sites via a court-sanctioned restructuring scheme. However, there is no guarantee that a judge will approve the proposal. A source familiar with the situation said any future decisions on rents would be for a potential new owner. Such extreme steps are usually attempted via an insolvency process known as a company voluntary arrangement in which landlords are handed a vote on any cost-cutting measures that will affect them. Barry Williams, the retailer's former managing director, was parachuted back on to the board at the beginning of the year to help address Poundland's spiralling crisis. Pepco crashed to a £548m loss in December after taking a £650m write-down on its UK operations. It blamed a 'significant decline in performance' as well as spiralling costs at Poundland for the setback. Under new owners, closures are expected to be accompanied by a huge cash injection as they seeks to turn around Poundland's dwindling fortunes. Prospective backers anticipate having to immediately pump in between £70m and £100m to stabilise the company. Those involved in the talks say Poundland's advisers at Teneo hoped to have entered exclusive talks with one of the remaining bidders this week. However, the timetable appears to have slipped, prompting speculation about whether investor appetite had waned as result of the funds needed to turn the retailer around and concerns over the complexity involved. There are also worries that trading at Poundland has continued to deteriorate, exacerbating its precarious situation. Last month, Pepco told investors not to expect 'major proceeds' from any sale of Poundland. It also warned that the chain might not make a profit in the forthcoming financial year. The business continued to face 'highly challenging trading conditions' in the six months to the end of March, it said. Like-for-like sales were down 7.3pc and pre-tax earnings slumped three quarters to €22m (£18.6m). A Pepco Group spokesman said: 'The focus of the group and advisers is currently on a potential sale of Poundland. This is an ongoing process and no final decisions have been taken.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
