Creditors meet with Focus today to seal a company voluntary agreement that could see 5,000 jobs saved at the DIY chain.


The country's biggest commercial landlords look set to back a company voluntary agreement (CVA) with Focus DIY when they meet today. The deal could save as many as 5,000 jobs at the DIY chain.

If passed, it will mean that Focus agrees to pay its creditors a proportion of what it owes them and landlords of stores that are to be closed would receive lump-sum payments in exchange for loss of rent.

Without 75% of creditor support, the firm will go under. Landlords make up the bulk of Focus' creditors and therefore control today's vote.

The British Property Federation (BPF), representing landlords, said that Focus' transparent dealings should be held up as an examplar for future deals, but is also calling for tougher controls on insolvencies.

The CVA will see leases for empty stores bought off with two lump sums - equivalent to six month's rent. The DIY chain operates 180 trading stores, while the 38 closed outlets are acting as a financial drain, with the company forking out £12m a year in rent.

The BPF added: "While the payout is less than the lease values, it's more than they would get if the firm went under."

Focus has also agreed to pay empty property rates on the 'dark' stores, which could save landlords more than the value of the rent. The remaining stores will switch to monthly rent payments in order to ease the company's cash flow.

The firm's lenders, HBOS and GMAC will grant a two year extension to the £50m revolving credit facility, which is due to expire at the end of this year.

If the CVA fails, Focus could enter into a pre-pack administration.

BPF chief executive Liz Peace said "The key to a successful CVA is putting all the cards on the table and being up front with all parties. Landlords will do everything they can to be flexible, and this is a prime example of how the industry has changed massively in recent years."

She added: "We still need tougher insolvency controls after the Insolvency Service admitted a third of deals don't meet its standards...We will see more and more CVAs and pre-packs in the coming months, so it's vital that insolvency regulation has enough teeth."

Focus chief executive Bill Grimsey said: "If we weren't in recession, Focus could be making over three times what we are today. But the flexibility of our landlords will save thousands of jobs and that's why we owe it to them to be wholly transparent in all our dealings. We could have closed more stores but we wanted to make this simple and fair. We have sought to do everything possible to ensure the CVA is handled fairly."

British Lad asset manager Ben Grose said: "We have a solid relationship with Focus and are keen to see it survive the down turn in the same way as we are supportive of all our tenants."

Land Securities portfolio director Dominic O'Rourke commented: "A CVA designed to help a businesses survive is clearly in everyone's interests. We are keen to have an open dialogue with our customers to help them maintain their business, keep people in jobs and give the consumer choice...Genuine calls for help, as we have seen with Focus, must not be drowned out by businesses crying wolf to try and steal an advantage."

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