Caffe Nero has announced that its creditors have approved its restructuring proposals after the struggling chain rejected an "unsolicited" takeover offer.
More than 90% of creditors, including the "overwhelming majority" of the chain's landlords, voted to approve a company voluntary arrangement (CVA) restructuring model on Tuesday.
It will allow Caffe Nero, which has around 800 stores across the UK and employs around 6,000 people, to seek rent cuts, changes to leases, and store closures.
The chain had proposed landlords receive 30p for every £1 of rent they are owed, and was seeking to move most stores to a turnover-rent based model. If there are any closures these are expected to be minimal.
The CVA was approved the day after Caffe Nero confirmed it had rejected an "unsolicited" takeover offer from the billionaire Issa brothers. The brothers are behind Lancashire-based EG Group, Britain's largest petrol forecourt retailer with around 6,000 forecourts globally. The pair sealed a deal to buy Asda for £6.8 billion in September.
Reports emerged on Monday that the brothers' offer would have seen Caffe Nero's landlords paid in full, in cash, for unpaid rents amassed during the pandemic.
Nero owner Gerry Ford rejected their offer, with the chain releasing a statement saying the brothers had a "clear intention" to disrupt the CVA "as a precursor to opportunistically acquiring the company at a later date".
But announcing the CVA approval, Nero appeared not to rule out a sale.
The company said in its statement that the restructure model now included "a modification that the Company will ensure compromised creditors (including landlords) will have their arrears paid in full in the event that a sale of the Group to the third party (which approached the Group late on Sunday night) occurs within the next six months".
In the statement, the company thanked its "landlords, business partners, suppliers and other creditors for their support and understanding in the process during these challenging times".
It read: "After the devastating effect caused by the pandemic on Caffe Nero, the approval of this CVA by the Company’s creditors safeguards the immediate future of the business, and provides a sustainable platform from which the Company can navigate the challenges ahead, and rebuild sales momentum over the medium to longer term."
Caffe Nero is one of many High Street firms to have sought a CVA as a result of plunging demand due to the pandemic, and landlords have responded with frustration.
Melanie Leech, chief executive of the British Property Federation, has said that CVAs “are not the solution” to the “mountain of accrued rent arrears across the commercial property sector growing at the rate of £1.5 billion a quarter”.
The reports come just weeks after the Issa brothers and their private equity backers, TDR Capital, landed an agreement to buy Britain's third-largest supermarket, Asda, for £6.8 billion from Walmart.