Byron, the struggling chain of burger restaurants, will announce plans this week to close more than a dozen outlets and slash its rent bill at many others as part of a financial rescue package.
Sky News has learnt that the company will launch a so-called company voluntary arrangement (CVA) on Wednesday that will require the approval of creditors including landlords.
The CVA is critical to Byron’s future because a new injection of cash into the business, agreed last month, will only take place if the restructuring of its property interests is voted through.
Sources close to the deal, which is being handled by KPMG, said the proposals were likely to involve the closure of around 15 poorly performing restaurants and a reduction of rental payments at approximately 20 others.
A creditor vote will take place towards the end of January, according to one insider.
If landlords vote to reject the CVA, Byron is unlikely to survive as a going concern, they added.
The effort to restructure its finances makes Byron the latest well-known company to use a CVA, following the approval of Toys R Us UK’s plans last month.
If the burger chain’s CVA does win the support of creditors, it would pave the way for a transaction under which Three Hills Capital Partners (THCP), an investment firm, will become its majority shareholder.
FPP Asset Management will become a new investor in the business, while current owner Hutton Collins will retain a minority stake.
Byron has been suffering amid rising costs and a downturn in trading at many of its sites, as well as broader pressure on the restaurant sector amid greater competition from high street and delivery-based rivals.
Information distributed to potential bidders for the business had indicated that 13 of its sites are loss-making or marginal, and fall into a category headed “exit immediately”.
A further dozen restaurants were marked for review and could be exited by a new owner “with or without a premium”, the documents said.?
Byron trades from just over 70 sites across the UK, having opened its first restaurant in 2007.
Millions of pounds of new money will be injected into Byron to fund the rescue plans.
The takeover led by Three Hills has been agreed at a huge discount to the £100m valuation attached to Byron when it last changed hands in 2013, with some insiders suggesting that it was now valued at as little as £20m.
Byron, which employs 1,800 people, closed four under-performing sites last year.
Insiders pointed out that the company had not breached its banking covenants, contrary to market rumours.
Last summer, Handmade Burger Co collapsed into administration, while companies including The Restaurant Group – which owns Garfunkel’s and Frankie & Benny’s – have been forced to change their leadership teams in an effort to revive their fortunes.
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Byron named Simon Cope, a former Wagamama executive, as its new chief executive in September, working alongside chairman Dalton Philips, the former boss of Wm Morrison.
Byron and KPMG both declined to comment on Tuesday.