Kirkland & Ellis is advising PizzaExpress group, the leading casual dining chain, on its restructuring via a restructuring plan and, in parallel, a company voluntary arrangement (CVA). The Company operates over 450 sites across the UK. Its business has been severely impacted by the ongoing global Covid-19 pandemic.
The group is undertaking a major financial restructuring involving a de-leveraging of the Group by a reduction of its total indebtedness by c.£1 billion (comprising a reduction of its external debt from £735 million to £319 million and a write-off of shareholder loans of c.£538 million) which is intended to be effected through a restructuring plan under the new Part 26A of the UK Companies Act 2006, with an interconditional CVA to effect an operational restructuring of its leasehold liabilities.
The CVA, in respect of PizzaExpress (Restaurants) Limited (PERL), was overwhelmingly approved on Friday, 4 September, by over 89% of creditors voting, and by PERL’s shareholder. The CVA involves rebasing PERL’s property portfolio and ongoing leasehold obligations, across seven categories, throughout England, Wales, Scotland and Northern Ireland. The CVA also compromises certain other liabilities, including specific contingent and historic liabilities and intra-group liabilities.
The restructuring plan was launched by PizzaExpress Financing 2 plc (the Plan Company) on 1 September. The restructuring plan relates to £400 million senior secured notes, £200 million senior unsecured notes, and the shares in the Plan Company - comprising three separate classes for the purposes of voting on the plan. The plan will give holders of the senior secured notes, new debt instruments and equity in the restructured group, facilitate the provision of £144m of new financing, and give holders of the senior unsecured notes equity in the restructuring group.
The first court hearing in respect of the restructuring plan is expected to be on or about 30 September. Subject to court approval and that of the requisite stakeholders, the Plan Company currently anticipates that the plan meetings will be held on 21 October and the restructuring plan would become effective on or about 30 October.
The Pizza Express restructuring plan is only the second to be launched, following the introduction of the restructuring plan procedure into the Companies Act at the end of June. For further information on the reforms, see our Alert. The first restructuring plan, of Virgin Atlantic Airways, was sanctioned on 2 September; Kirkland & Ellis advised the Civil Aviation Authority as regulator and contingent creditor. For further information on Virgin’s plan, see our Alert.
The Kirkland team is being led by restructuring partners Sean Lacey, Elaine Nolan, Tom Jemmett and Kon Asimacopoulos and capital markets partner William Burke, and includes lawyers across our market leading restructuring, capital markets, tax, litigation, corporate and intellectual property groups. The CVA supervisors are Clare Boardman and Daniel Butters of Deloitte LLP.