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Focus aims to strike deal with creditors

Ben Marlow

The chief executive of Focus, Britain’s third-largest DIY chain, is considering a company voluntary arrangement (CVA) in an attempt to secure the struggling group’s future.

Bill Grimsey has instructed the KPMG restructuring team to prepare a CVA as part of a review of the business.

Until recently, a CVA was a relatively unknown and little-used legal procedure. It lets companies reduce their debts and interest payments without going into administration – but it requires the consent of at least 75% of creditors. Sports retailer JJB and caravan trader Discover Leisure both recently used CVAs to restructure their businesses.

Grimsey’s advisers have also agreed in principle with the company’s banks to renew a two-year credit facility, which runs out at the end of 2009.

Focus was bought by American private equity firm Cerberus in 2007, which paid £1 for its equity and assumed £225m in debt. The company is understood to be ahead of budgeted sales for the past 12 months.

After predicting a 10% fall in sales in 2009, retail veteran Grimsey, who has previously led Wickes and Iceland, took drastic measures, including cutting the workforce by 700.

He has also reduced supply-chain costs and slashed the product line from 18,000 to 12,000 to create store space and is planning to add a pet-care range to every store. Monthly rental payments have also been agreed with some landlords.

Focus DIY was founded by entrepreneur Bill Archer in 1987. The business made a fortune for Archer but huge debts almost forced its collapse before the Cerberus rescue.

21 June 2009
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