Mar 4, 2016
UK's BHS wants rent bill slashed to keep stores open
Mar 4, 2016
The owners of struggling British department store chain BHS have proposed a radical restructuring of its store estate, requiring landlords to slash its rent bill to keep stores open.
The retailer, which is being advised by KPMG, the accountancy firm, said on Thursday over half its 164 UK store sites would not be viable if it did not achieve the rent reductions.
The move comes a year after buyout firm Retail Acquisitions, a collection of little known investors, bought the loss-making chain from billionaire Topshop owner Philip Green. At the time it traded from 171 UK stores and 88 franchise stores internationally, employing 11,000.
BHS, hit hard by intense competition in its sector, has proposed a company voluntary arrangement (CVA) to its landlords, a form of compromise agreement to avoid administration or liquidation.
Its proposal would see 77 of the most viable stores retained at current rents, though paid monthly rather than quarterly, for three years.
A further 47 stores have been identified as viable only if their monthly rent is reduced by either 75 percent or 50 percent.
The remaining 40 stores would continue to trade for a minimum of 10 months while talks were held with landlords to reduce rents substantially. Where rent reductions are achieved these stores will remain open.
"It is hoped that the store closure number will be kept to a minimum," said Brian Green, restructuring partner at KPMG.
BHS needs to secure at least 75 percent creditor approval at a March 23 vote for the CVA to go through.
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