Giraffe Concepts' creditors approve proposed CVA
The group will now be allowed to complete its restructuring plan.
Creditors of Giraffe Concepts, the operator of the Ed’s Easy Diner and Giraffe restaurant brands, have approved its proposed company voluntary arrangement (CVA).
“This is a critical step forward for the business, allowing Giraffe Concepts to complete its financial restructuring plan and embark on a comprehensive operational transformation programme,” Will Wright, restructuring partner at KPMG and joint supervisor of the CVA, said.
“The vote saw a significant majority of all voting creditors choosing to approve the CVA, surpassing the 75% total required in order to pass the resolution,” Paul Berkovi, director at KPMG, added
The CVA document put together by KPMG revealed that Ed’s Easy Diner and Giraffe brands have been experiencing a consistent decline in profitability. The document showed the two brands generated turnover of £67.1 million for FY17, but a negative EBITDA of circa £3 million. For FY18, turnover is set to have declined to £61.7 million, while negative EBITDA is set to be £3.63 million.
“Based on historic trends, this Ebitda trajectory will continue if further investment is not made in the core estate and this will, in turn, put further downward pressure on the business and result in the company continuing to have insufficient funds to continue to trade beyond 25 March 2019 without further debt or equity funding,” the CVA document said.
The company previously said it would close 27 of the brands’ 87 restaurants under the proposed agreement with landlords, whilst rent reductions were being sought on a further 13 sites.
It was able to obtain £6.5 million of additional funding from a related undertaking of Boparan Group, Amber REI Holdings (AREIL), which was subject to obtaining the compromises and arrangements set out in the CVA proposal. To date, AREIL has provided approximately £27 million of unsecured funding to cover initial acquisition costs, trading losses and capex requirements.
