Discover Leisure set for crunch meeting
Monday 15 June 2009
Caravan company Discover Leisure will today face creditors with its plan to restructure debts, in a last ditch bid to avoid administration.
The Yorkshire-based group announced last month that it planned a company voluntary arrangement (CVA) to tackle its debt pile.
Sources close to the group this weekend said signs were "positive" that the creditors would support the CVA at today's meeting at the Hilton Hotel in Leeds. It needs 75 per cent approval to secure the obscure legal procedure. If successful it would become only the second listed company to avoid administration by using a CVA. KPMG is set to supervise the process if the creditors approve the plan today.
The terms of the CVA would see creditors repaid just over a fifth of what they're owed over the next five years. KPMG partner Mark Firman said the process would ensure Discover survived and creditors would get a higher return than via administration.
If it is rejected, the group is likely to call in the administrators. While it has backing from Royal Bank of Scotland and Lloyds Banking Group to renegotiate its £50m facility, the move is dependent on securing the CVA.
This follows JJB Sports, which successfully secured a CVA last month, becoming the first listed company to avoid administration. The group secured the debt plan in April when 99 per cent of creditors voted in favour of the procedure, saving many of the company's 12,000 jobs.
Discover announced at the end of May that its first-half loss had widened from £1.8m a year ago to £9.5m in 2009. It owes just over £10m to suppliers of its caravans.
Chairman David Morrow said of the results: "After a period of rapid expansion, the global financial crisis and the huge fall in consumer confidence from 2008, the group's strategy has been seriously challenged."
Discover was launched in 2003, and floated on AIM two years later.
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