Cafe Rouge Owner Mulls Rent Cuts to Drag Itself Out of the Red
Cafe Rouge Owner Mulls Rent Cuts to Drag Itself Out of the Red
(Bloomberg) --
Casual Dining Group, a KKR-owned company that runs continental-themed mass market restaurants brands in the U.K., is weighing cutting costs with its landlords and filing for administration, according to a person familiar with the matter.
The owner of Cafe Rouge and Bella Italia, and employer to 6,000 people, said on Monday it hired advisers AlixPartners and law firm Kirkland & Ellis as it mulls alternatives to address liabilities that were last reported at near $300 million one year ago.
The group’s 250 restaurants in the U.K., familiar sights across British town centers, have remained closed since late March when the government imposed a lockdown to stem the spread of Covid-19.
One of the options being considered is a so-called company voluntary arrangement, a type of U.K. insolvency process, which would allow the company to lower rents if at least 75% of its landlords agree to it, the person said, asking not to be identified because the matter it’s private.
In addition, the group is also mulling whether to put some parts of the business in administration to protect them from creditors, the person said. The company filed a notice of intent to appoint administrators with a court in London on Monday.
A company spokeswoman confirmed the notice of intent to appoint an administrator without elaborating on the debt review. The “notice will protect the company from any threatened potential legal action from landlords while we review the detail of the government advice, and formulate a plan for the company in these difficult times,” she said.
Casual Dining Group was taken over by KKR and Pemberton Asset Management from Apollo Global Management in a debt-for-equity swap in 2018. The company reported 242 million pounds ($295 million) of liabilities in May 2019, according to its latest available accounts.
A KKR representative said the firm is working with Casual Dining and its advisers in order to achieve “the best possible outcome for the company and its employees.”
A representative for Pemberton declined to comment. Sky News first reported the AlixPartners appointment on Monday.
Other indebted restaurant chains in the U.K. were struggling even before the pandemic amid lackluster growth prospects in Britain. In March, Italian-themed chain Carluccio’s entered into administration, and last year the collapse of celebrity chef Jamie Oliver’s U.K. restaurant business into insolvency led to nearly 1,000 job losses.
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