Proposed CVAs and Appointment of Administrators
January 26 2009 - 7:38AM
UK Regulatory
TIDMSTYL
RNS Number : 2428M
Stylo PLC
26 January 2009
26 January 2009
Stylo plc ("Stylo", "the Group")
Proposed Company Voluntary Arrangements and appointment of Administrators
* Stylo's long-term future to be secured through an innovative combination of
Company Voluntary Arrangements ("CVAs") and administration
* Stylo subsidiaries to be refinanced and restructured in administration
* Proposal to repay all creditors in full and reach new agreement with landlords
* Employee rights and pension scheme unaffected
* Process ensures equitable treatment of and transparency for all stakeholders
* Subsidiaries to exit administration following approval
* Support for the process from Prudential, Lloyds Group and Barclays
* The Ziff family has confirmed its intention to make substantial further funds
available to the Group
Stylo's trading update to the market on 2 December 2008 emphasised the extremely
challenging retail conditions affecting the Company and sector as a whole and
this was reiterated in the announcement of 22 January 2009 when the Board also
confirmed that it was exploring strategic options for the business.
The Board has been actively pursuing a recovery programme to return the business
to profitability by reducing costs, closing underperforming outlets, selling
businesses such as Shellys, improving the management team, reducing stock levels
and developing new formats. Notwithstanding these actions, the trading
conditions in the retail sector have deteriorated markedly. The Board does not
anticipate any improvement in the trading environment in the short-term. Against
this background the Board has concluded that current and projected sales can not
support the current cost base of the business, in particular the high rent
obligations, and therefore a more pro-active restructuring approach is required
to return the business to profitability.
Accordingly, on 26 January 2009, Neville Kahn, Daniel Butters and Lee Manning of
Deloitte were appointed joint administrators ("the Administrators") of the
following subsidiaries of Stylo plc:
Stylo Barratt Shoes Limited, at 12:15pm
Stylo Barratt Properties Limited, at 12:02pm
Priceless Shoes Properties Limited, at 12:17pm
Barratts Shoes Properties Limited, at 11:58am
Comfort Shoes Limited, at 12:00pm
These companies are either the principal operating subsidiaries or the lessees
of the principal operating leases of the group. All of these subsidiary
companies are now in administration.
The primary objective of administration is to rescue companies as going
concerns. In this case the advisers to the business have developed a novel and
innovative structured arrangement designed to achieve this objective and ensure
the best possible outcome for all stakeholders, whereby the Administrators will
propose Company Voluntary Arrangements ("CVAs") to the creditors of each of the
subsidiaries in administration. The subsidiaries in administration will continue
to trade as normal, operating as going concerns, both during and after the
administration conditional on the approval of the CVAs. It is this application
of the CVA mechanism, to restore the group's business model to viability, which
will facilitate the best outcome for creditors; and a better outcome for
creditors than would be likely if a "pre-pack" administration had been proposed.
So that the CVA proposals can be considered by creditors as soon as possible,
details of the proposals and notices of meetings of the relevant subsidiaries'
creditors will be posted today, calling the meetings of creditors for 12
February 2009.
The objective of the CVAs is to restore the group's business model to viability
primarily by restructuring the rental liabilities on its property portfolio to
reflect the ability of each individual store to trade profitably. The rights of
employees and the companies' liabilities under the group pension scheme will not
be affected by the proposed CVAs.
The Administrators understand from the board that initial conversations with the
relevant subsidiaries' major creditors, including landlords and lenders, have
indicated those creditors to be supportive of the proposals and of the Stylo
group's business on an ongoing basis.
If the CVAs are approved by the creditors of the subsidiaries in administration,
it is anticipated that the administrations will be terminated at the earliest
time practicable after the meetings called for 12 February 2009. Management and
control of the relevant subsidiaries will be returned to their boards on the
termination of the administrations.
The Ziff family has confirmed its intention to make substantial further funds
available to the Group if requested to do so by the Board. The terms of such
further investment remain subject to final agreement between the independent
directors and the Ziff family. A further announcement will be made without delay
upon agreement being reached as to the terms of any such funding.
For the avoidance of doubt, Stylo plc is not in administration nor is it
proposed to be the subject of a CVA. However, in light of the above, Stylo plc
has requested and has been granted a suspension of trading in its shares on AIM
with effect from the opening of the market this morning.
Michael Ziff, Chairman & Chief Executive of Stylo, commented:
"After much careful thought and planning, I am satisfied that we are proposing
an arrangement which will enable the business to move forward with a stronger
foundation and achieve a solution that is in the best interests of all
stakeholders."
Further announcements will be made in due course, as appropriate.
For further information please contact:
+------------------------------------+------------------------------------+
| Stylo plc | 01274 617 761 |
| Michael Ziff | |
+------------------------------------+------------------------------------+
| Arbuthnot Securities Limited | 020 7012 2000 |
| Katie Shelton / Nick Tulloch | |
+------------------------------------+------------------------------------+
| | |
+------------------------------------+------------------------------------+
| Smithfield Consultants | 020 7360 4900 |
| John Kiely / Andrew Wilde / Will | |
| Henderson | |
+------------------------------------+------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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