Founders say that the CVA will enable the company to restructure the repayment profile of their debt.
Chilango announced that the majority of its creditors and shareholders have approved its company voluntary agreement (CVA) proposals, including a bonds arrangement and creation of a preferred share class.
Last November, the burrito chain was in talks of restructuring with RSM after it had raised earnings from its mini-bond scheme.
In a joint statement, founders Eric Partaker and Dan Houghton were delighted by the approved CVA proposals.
“While Chilango remains profitable at restaurant level, with three consecutive years of 6% like-for-like sales growth, the CVA enables the company to exit non-trading leases, reduce rents in select locations, and restructure the repayment profile of the company’s debt.”
About 98.6% of votes agreed to a Chilango Bonds arrangement, whilst a 90% vote affirmed the creation of a preferred share class, which shall maintain the principal balances and returns of bondholders and note holders. Before the CVA, Chilango has taken steps to reduce its central costs.
Moreover, 84% voted in favour of the arrangement for the primary trading entity Mucho Mas Limited.
“Together with a reduction in central costs, the successful CVA will materially improve the balance sheet and make the business both EBITDA and cash flow positive at group level,” Partaker and Houghton added.
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