DIY chain in talks with creditors over deal that could save around £12m a year from non-trading properties.
Focus DIY confirmed yesterday that it is planning a Company Voluntary Agreement (CVA) to help "safeguard" its future and that of its employees.

In a statement Focus said that it is in negotiations with advisers to address the company's "short term financial situation". It added that initial talks with its major creditors "indicate a broad level of support for the proposal".

However, there has been speculation that the company's landlords may oppose the move, which would see Focus hand back leases on 38 non-trading properties.

Under the proposed CVA Focus has state that landlords of the closed premises would receive two lump-sum payments in exchange for loss of rent. Turnaround specialist Company Rescue states that, with a well-written CVA, companies "can terminate landlords leases with nil cost". Focus would require the support of its landlords in a vote on August 24 to pass the CVA.

According to a report in The Times, if landlords do not back the CVA and Focus enters administration, it is likely that the company will re-emerge through a pre-pack deal, leaving landlords of the closed stores "empty handed".

The company statement claims that Focus is trading well but cannot support the cash drain of around £12m per year from its 38 non-trading properties - many of which were closed in September 2008.

It read: "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."

As part of the agreement, remaining landlords of trading Focus stores would be asked to accept monthly payments for the next 18 months, after which Focus would revert to quarterly payment.

Focus said that the company is trading inline with expectations and hopes the CVA will protect its future and those of its employees.

"A CVA at the current time would enable Focus DIY to safeguard all 4,572 jobs across all its current 180 stores and support centres, which are performing strongly in the current market. In addition the group can confirm that there will be no financial impact on its trade and non trade suppliers, who will continue to be paid in accordance with normal payment terms."