The billionaire owners of Asda are trying to launch an audacious raid on Caffè Nero by buying part of its £350 million debt pile.

 Brothers Mohsin and Zuber Issa have reportedly approached lenders to the coffee chain seeking to build a position that would allow them to bid for control in a debt-for-equity swap if Caffè Nero was forced to restructure its borrowings.

 The move, first reported by The Sunday Telegraph, would be in partnership with their EG Group’s private equity backer, TDR Capital. It was reported that the brothers had held talks with Alcentra and Partners Group to buy loans of £180 million.

Under the CVA proposal, a number of its 650 Caffe Nero-branded sites could eventually close, although the focus of the plan is to switch to a turnover rent model.

The company also operates 150 stores under brands such as Harris & Hoole, which are not part of the CVA.

Lenders to Caffe Nero are expected to play a role in deciding the chain’s future.

Mezzanine debt providers Alcentra and Partners Group have drafted in FTI Consulting to advise them, while banks are being advised by Deloitte.

The CVA vote, which is scheduled to close on Monday evening, is one of a number that have drawn the ire of the British Property Federation, which represents commercial landlords and has accused retailers and restaurant chains of “weaponizing” the insolvency tool.

In response, high street players say their futures have been jeopardised by the carnage of the coronavirus pandemic, with tens of thousands of jobs already lost.

Like rivals such as Pret a Manger, Caffè Nero has been heavily impacted by the reduced footfall in city centres as millions of Britons continue to work from home.

The chain employs more than 5,000 people and says it serves 135m customers annually.

Source: The Irish Times

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