Proposed CVAs and Appointment of Administrators

 

TIDMSTYL 
 
RNS Number : 2428M 
Stylo PLC 
26 January 2009 
 

26 January 2009 
Stylo plc ("Stylo", "the Group") 
Proposed Company Voluntary Arrangements and appointment of Administrators 
  *  Stylo's long-term future to be secured through an innovative combination of 
  Company Voluntary Arrangements ("CVAs") and administration 
  *  Stylo subsidiaries to be refinanced and restructured in administration 
  *  Proposal to repay all creditors in full and reach new agreement with landlords 
  *  Employee rights and pension scheme unaffected 
  *  Process ensures equitable treatment of and transparency for all stakeholders 
  *  Subsidiaries to exit administration following approval 
  *  Support for the process from Prudential, Lloyds Group and Barclays 
  *  The Ziff family has confirmed its intention to make substantial further funds 
  available to the Group 
 
 
 
Stylo's trading update to the market on 2 December 2008 emphasised the extremely 
challenging retail conditions affecting the Company and sector as a whole and 
this was reiterated in the announcement of 22 January 2009 when the Board also 
confirmed that it was exploring strategic options for the business. 
The Board has been actively pursuing a recovery programme to return the business 
to profitability by reducing costs, closing underperforming outlets, selling 
businesses such as Shellys, improving the management team, reducing stock levels 
and developing new formats. Notwithstanding these actions, the trading 
conditions in the retail sector have deteriorated markedly. The Board does not 
anticipate any improvement in the trading environment in the short-term. Against 
this background the Board has concluded that current and projected sales can not 
support the current cost base of the business, in particular the high rent 
obligations, and therefore a more pro-active restructuring approach is required 
to return the business to profitability. 
Accordingly, on 26 January 2009, Neville Kahn, Daniel Butters and Lee Manning of 
Deloitte were appointed joint administrators ("the Administrators") of the 
following subsidiaries of Stylo plc: 
Stylo Barratt Shoes Limited, at 12:15pm 
Stylo Barratt Properties Limited, at 12:02pm 
Priceless Shoes Properties Limited, at 12:17pm 
Barratts Shoes Properties Limited, at 11:58am 
Comfort Shoes Limited, at 12:00pm 
These companies are either the principal operating subsidiaries or the lessees 
of the principal operating leases of the group. All of these subsidiary 
companies are now in administration. 
The primary objective of administration is to rescue companies as going 
concerns. In this case the advisers to the business have developed a novel and 
innovative structured arrangement designed to achieve this objective and ensure 
the best possible outcome for all stakeholders, whereby the Administrators will 
propose Company Voluntary Arrangements ("CVAs") to the creditors of each of the 
subsidiaries in administration. The subsidiaries in administration will continue 
to trade as normal, operating as going concerns, both during and after the 
administration conditional on the approval of the CVAs. It is this application 
of the CVA mechanism, to restore the group's business model to viability, which 
will facilitate the best outcome for creditors; and a better outcome for 
creditors than would be likely if a "pre-pack" administration had been proposed. 
So that the CVA proposals can be considered by creditors as soon as possible, 
details of the proposals and notices of meetings of the relevant subsidiaries' 
creditors will be posted today, calling the meetings of creditors for 12 
February 2009. 
 
The objective of the CVAs is to restore the group's business model to viability 
primarily by restructuring the rental liabilities on its property portfolio to 
reflect the ability of each individual store to trade profitably.  The rights of 
employees and the companies' liabilities under the group pension scheme will not 
be affected by the proposed CVAs. 
The Administrators understand from the board that initial conversations with the 
relevant subsidiaries' major creditors, including landlords and lenders, have 
indicated those creditors to be supportive of the proposals and of the Stylo 
group's business on an ongoing basis. 
If the CVAs are approved by the creditors of the subsidiaries in administration, 
it is anticipated that the administrations will be terminated at the earliest 
time practicable after the meetings called for 12 February 2009. Management and 
control of the relevant subsidiaries will be returned to their boards on the 
termination of the administrations. 
The Ziff family has confirmed its intention to make substantial further funds 
available to the Group if requested to do so by the Board. The terms of such 
further investment remain subject to final agreement between the independent 
directors and the Ziff family. A further announcement will be made without delay 
upon agreement being reached as to the terms of any such funding. 
For the avoidance of doubt, Stylo plc is not in administration nor is it 
proposed to be the subject of a CVA. However, in light of the above, Stylo plc 
has requested and has been granted a suspension of trading in its shares on AIM 
with effect from the opening of the market this morning. 
Michael Ziff, Chairman & Chief Executive of Stylo, commented: 
"After much careful thought and planning, I am satisfied that we are proposing 
an arrangement which will enable the business to move forward with a stronger 
foundation and achieve a solution that is in the best interests of all 
stakeholders." 
Further announcements will be made in due course, as appropriate. 
For further information please contact: 
+------------------------------------+------------------------------------+ 
| Stylo plc                          | 01274 617 761                      | 
| Michael Ziff                       |                                    | 
+------------------------------------+------------------------------------+ 
| Arbuthnot Securities Limited       | 020 7012 2000                      | 
| Katie Shelton / Nick Tulloch       |                                    | 
+------------------------------------+------------------------------------+ 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
| Smithfield Consultants             | 020 7360 4900                      | 
| John Kiely / Andrew Wilde / Will   |                                    | 
| Henderson                          |                                    | 
+------------------------------------+------------------------------------+ 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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