EG's bid could force the coffee chain to postpone the CVA vote.
The Issa brothers are reportedly set to add to their business portfolio as they have launched a takeover bid for coffee shop chain Caffe Nero hours before it seeks approval from landlords to cut its rent bill.
Mohsin and Zuber Issa, who are responsible for turning EG into one of the UK’s biggest private companies, wrote to Caffe Nero to propose buying the chain from Gerry Ford, founder and controlling shareholder.
Under the EG proposal, Caffe Nero’s landlords would be paid in full for the rent arrears owed to them as a result of the Covid-19 pandemic.
Sky News reported that people close to the matter said that it represented a significant improvement for the chain’s store-owners over the company voluntary arrangement (CVA) proposal.
They are set to vote later on November 30, 2020.
It is not known whether Caffe Nero has responded to the EG offer or what the offer terms were.
Sources have said that EG’s bid could force the coffee chain to postpone the CVA vote.
Under the CVA proposal, a number of its 650 Caffe Nero-branded sites could eventually close, however, the focus of the plan is to switch to a turnover rent model.
Caffe Nero also operates 150 stores under brands like 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 is one of several that have annoyed the British Property Federation, which represents commercial landlords.
The British Property Federation has accused retailers and restaurant chains of “weaponising” the insolvency tool.
High street retailers have responded by saying their futures have been endangered due to the pandemic, with tens of thousands of jobs already lost.
Like its competitors, Caffe Nero has been impacted by the reduced number of people in city centres as millions continue to work from home.
Caffe Nero employs more than 5,000 people and reportedly serves 135 million customers each year.
The planned bid by the Issa brothers showcases their growing reputation as entrepreneurs.
Their pursuit of growth has seen their business employ over 44,000 people across 6,000 sites in Europe, the US and Australia.
The planned Caffe Nero takeover comes after the Issa brothers and their private equity backers, TDR Capital, purchased Asda for £6.8 billion in September 2020.