Marcus Leroux: Retail Correspondent
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Kingfisher, the owner of B&Q, has written to landlords demanding better terms after a struggling rival was able to renegotiate its leases.
Focus DIY, the private equity-owned retailer, secured a company voluntary agreement (CVA) with creditors in August, allowing it to shed closed stores and pay rent monthly in advance, instead of making more onerous quarterly payments.
The move is believed to have angered Kingfisher, which believes that the CVA process is forcing stronger retailers to subsidise loss-making rivals.
Ian Cheshire, the chief executive of Kingfisher, wrote to the landlords that it shares with Focus and informed them that the company would demand similar concessions.
The move reveals how CVAs, which have become increasingly popular during the recession as an alternative to pre-pack administrations, have caused rifts between retail groups as well as between landlords and tenants.
Mr Cheshire had criticised the use of CVAs in general, without criticising Focus’s plan. He said in August: “The system is being exploited by some managers to get rid of what they don’t like in one go. It is being presented as ‘if you don’t agree to this, we’ll go bust’. This system is making it easier for people to pick and choose which bills they’re going to pay.”
Bill Grimsey, the chief executive of Focus, said at the time that the comments were “crass”. Last night he added: “Ian Cheshire should be more UK Plc-minded. It is surprising that a FTSE 100 would make these public statements.”
“Kingfisher's strategic plan this year included Focus going out of business. He's clearly miffed that it is not going to plan,” he said. “We were on the turkeys list with MFI and Woolworths and we are still here.”
Focus was able to stop paying rent on 38 closed stores and to pay monthly rent for 18 months.
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