More than 89% of all responding creditors voted for the CVA during a virtual meeting last Friday (4 September), passing the 75% approval threshold; and 67% of responding unconnected creditors approved the proposal, more than the 50% required.
An overall majority of landlords also voted in favour of the CVA.
The CVA, which was announced last month, only relates to PizzaExpress’ UK restaurants and will not impact its sites in Jersey, Ireland or its international estate.
As well as the planned closures, the CVA will also allow for a resetting of the group’s UK leasehold obligations, which it hopes to achieve through a combination of reduction in outstanding arrears, reduced rental agreements, a temporary move from quarterly to monthly rents and other measures.
PizzaExpress has previously said the CVA is intended to improve the operational performance of the business against the backdrop of a challenging trading performance; difficult market conditions caused by the Covid-19 crisis; and the effect of lockdown measures upon its restaurants.
The proposal is part of a wider holistic recapitalisation and restructuring transaction that was set out by the group in August.
This restructuring will see a significant de-leveraging of the group’s external debt, from £735m to £319m; an extension of maturities; and the potential transfer of majority ownership to its secured noteholders if a higher bid is not provided by a third party.
PizzaExpress previously announced it had engaged Lazard & Co to advise it on a sale process and to help identify third party interest in an acquisition of the group.
Should a third party fail to provide such a bid, the holders of the senior secured notes will acquire the business, with individual holders will be entitled to receive shares (pro rate) in a new holding company of the group and £200m of new senior secured notes, due in 2025.
As a result, the transaction will involve a change of ownership and the existing shareholders will be entitled to receive a minority equity position in the new holding company.
The process will also include a major recapitalisation, with the provision of up to £144m of committed new facilities, £70m of which will be used to support the re-opening of its UK estate and further strategic development, with the remaining £74m available for utilisation in refinancing the group’s existing super senior debt facility, if required.
The group currently anticipates that its existing £70m super-senior credit facility will remain in place and mature on 30 April 2023.
There will also be a divestment of the group’s mainland China business to an affiliate of Hony Capital.
Although PizzaExpress says the majority of its estate was trading profitably before lockdown, EBITDA across the estate had been declining for the last three years.
It adds that the unavoidable reduction in revenue as a result of the lockdown, combined with higher costs associated with reopening restaurants and uncertainty about the shape of the UK economy’s recovery, mean that the group’s rental cost base is no longer sustainable.
355 PizzaExpress restaurants are currently open in the UK, with over 30 more restaurants and Live venues scheduled to reopen in the coming weeks.
