July 29 2014 Latest news:
Restaurants group Tragus is seeking to agree Company Voluntary Arrangements (CVAs) as part of restructuring plans for its Café Rouge and Bella Italia chains. Cafe Rouge in Exchange Street, Norwich Picture: James Bass
Wednesday, June 4, 2014
Restaurants group Tragus is seeking to agree Company Voluntary Arrangements (CVAs) as part of restructuring plans for its Café Rouge and Bella Italia chains.
Advisory and restructuring services firm Zolfo Cooper, which has been appointed to oversee the process, said the CVAs would enable Tragus to revise lease terms and refocus the businesses on “a more profitable core estate”.
The Café Rouge and Bella Italia websites currently list more than 200 sites, including more than 20 in the eastern region including Norwich, Bury St Edmunds, and the Center Parcs holiday village at Elveden.
There is no indication at this stage of which branches are likely to be affected by the proposals.
Tragus hopes to switch the rents on 150 outlets to monthly from quarterly. Another 19 restaurants will see their rent reduced to 60% of current levels for two years and paid monthly. Lastly, another 32 outlets will see their rent reduced to 50% of current levels for three months. It said compromise payments would be made to all landlords asked to cut rents.
Private equity firm Apollo Capital Management, leader of a consortium which bought Tragus earlier this year from rival Blackstone, said it would commit £20m of new money to Tragus once a CVA was reached with landlords. In total it plans to invest £110m over five years in the Café Rouge and Bella Italia brands.
Zolfo Cooper has also been charged with identifying “equity sponsors” for the group’s Strada business, which has 56 sites across the country, including a branch in Colchester. This effectively puts the business up for sale, with Tragus said to have placed a price tag of around £40m on the chain.
In addition, Tragus, which currently employs around 7,000 staff, also plans a debt-for-equity swap to cut its borrowings to £91m from £354m.
It said neither the CVAs nor the Strada process will have any impact on the day to day running of the business for customers, employees, suppliers and trade partners.