Lord Sugar, the Amstrad founder and star of The Apprentice, is fuelling a landlord-led revolt against a rescue deal for Caffe Nero, the struggling chain of coffee shops.
Sky News has learnt that Amsprop Investments, the peer’s private commercial property group, is among seven parties which have lodged a legal challenge aimed at blocking Caffe Nero’s company voluntary arrangement (CVA).
Amsprop’s involvement in the challenge, which is understood to have been filed on Christmas Eve, will intensify scrutiny of a restructuring that will affect the fate of thousands of high street workers.
A spokesman for Lord Sugar confirmed the involvement of Amsprop
Under the plans tabled by Gerry Ford, Caffe Nero’s controlling shareholder, landlords would forfeit most of their outstanding rent payments – a move which has angered commercial property-owners who have seen their businesses hammered by the coronavirus pandemic.
Landlords were, however, promised full payment of rent arrears as part of a takeover offer proposed just before December’s CVA vote by EG Group, the petrol station empire run by Lancashire-based brothers Mohsin and Zuber Issa.
The Issas, who are in the process of buying Asda alongside their private equity backers, TDR Capital, are understood to be underwriting the cost of the legal challenge to the CVA.
One source said that the landlords who were contesting the restructuring were largely ‘mom and pop’ property-owners who would not have the resources to fund a significant legal fight.
The involvement of Lord Sugar’s group, which was confirmed by a spokesman for the tycoon, will underline ongoing tensions between commercial landlords and tenants more than nine months after the COVID-19 crisis erupted.
Caffe Nero’s CVA was approved by creditors last month, and will be implemented unless the challenge is successful.
Mohsin and Zuber Issa are understood to be underwriting the cost of the legal challenge to the CVA.
One disgruntled landlord described the restructuring as “a sham” and said it appeared that board members were conflicted by virtue of their status as shareholders in the company.
Caffe Nero’s directors refused to adjourn the CVA vote despite the eleventh-hour emergence of EG’s takeover bid – a refusal contested in court documents.
In a statement this weekend, a Caffe Nero spokesman said: “We are aware a challenge has been filed by a small number of landlords at what appears to be the instigation of a third party.
“We still firmly believe the terms of the CVA, which passed with over 90% support, are in the best interests of all our creditors and we will openly engage with any landlord who wishes to discuss it further.
“We intend to defend the challenge vigorously.
“In the meantime, we remain focussed on managing the business through the current Covid-19 enforced trading restrictions, and re-growing our sales in the months and years ahead.”
The chain employs more than 5,000 people
As part of the CVA, Mr Ford has pledged £5m to a ‘survival fund’ aimed at withstanding any renewed escalation of the coronavirus crisis as it braces itself for a legal challenge from landlords.
Caffe Nero employs more than 5,000 people and trades from hundreds of stores across the UK.
Like rivals such as Pret a Manger, Caffe Nero has been heavily impacted by the reduced footfall in city centres as millions of Britons continue to work from home.
Pret and Costa Coffee, which is owned by The Coca-Cola Company, have been among the sector’s big players forced to make substantial redundancies since the start of the pandemic.
EG declined to comment.