MORE woes for the hight street and shopping malls as The Original Factory Shop becomes the latest retailer to go down the route of launching a Company Voluntary Arrangement (CVA).

It is reported that the budget retailer is proposing to close 32 of its 224 stores with the aim of reducing rents on the rest of its stores.

The company states that it has filed for the CVA against a backdrop of challenging market wide retail conditions and business specific issues, the Company has been considering a number of strategic options to return to a stable financial position.

They say: “The Company believes that there are a number of stores which are currently not financially viable (and would not be in the future) or that would become financially viable only if store costs were to be reduced.

“Poor trading performance in the past 12 months, caused by a challenging retail environment and internal issues, which has led to cash shortages at end of March 2018 and June 2018;

“In early June 2018, there was a real risk the Company would have to launch an accelerated sales process and advisors were engaged to start the process. There was a likelihood that this sale process would have been concluded via administration. Since then agreement has been reached between the Company’s lenders and shareholders which avoids this eventuality if a CVA is approved.

“If the CVA is not approved and the new investment is not received it is expected that the Company will be placed into administration.’

Under the CVA proposals store have been categorised

Termination Rights – Category No change to current lease terms

Termination Rights – Category B1
Landlord has the option to terminate the lease within the first 180 days (giving 60 days’ notice) Company has the right to terminate the lease after 36 months (giving 60 days’ notice)

Termination Rights – Category B2 Landlord has the option to terminate the lease within the first 180 days (giving 60 days’ notice) Company has the right to terminate the lease after 24 / 36 months (giving 60 days’ notice)

Termination Rights – Category B3 Landlord has the option to terminate the lease within the first 180 days (giving 60 days’ notice) Company has the right to terminate the lease after 12 / 24 / 36 months (giving 60 days’ notice)

Termination Rights – Category C Landlord has the option to terminate the lease at any point (giving 30 days’ notice) Company has the right to terminate the lease at any point (giving 30 days’ notice) subject to automatic determination on 30 September 2018 unless the Company notifies that it wishes to remain in occupation on peppercorn rent but paying rates, insurance & service charge.

Llanelli Online understands that three stores in Carmartehsnhire are on the list of leases to be offered including St Clears Cat B2 Kidwely Cat B3 and Pontarddulais Cat C.

There are a number of other stores across Wales which will fall into the categories and which, may face closure.

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