Focus to pursue CVA rescue plan

(Reuters)

Home improvement retailer Focus DIY said on Wednesday it was planning a Company Voluntary Arrangement (CVA), an increasingly popular insolvency process, to safeguard its future.

In a statement the firm, owned by U.S. private equity group Cerberus, said it was in talks with its advisers to address its "short term financial situation."

It said it was trading well and profitably but could no longer continue to support an annual cash drain of about 12 million pounds from 38 non-trading properties.

A CVA would see Focus hand back the stores to landlords who would receive a payment in lieu of rent. It would require the support of landlords in an August 24 vote.

"The drain from these stores threatens the immediate future of the core business and, as such, the group presently considers a CVA to be the best course of action," it said.

Focus said a CVA would enable the company to safeguard 4,572 jobs across all its 180 trading stores and support centres.

Media reports have said if Focus does not agree a CVA it would likely fall into administration with the firm re-emerging under its existing management team through a so called pre-pack deal.

(Reporting by James Davey, editing by Mark Potter)