Homebase “confident” about the future as creditors overwhelmingly approved its rescue plan that will shut 42 of its stores – about a fifth of the portfolio it had at the end of May.
This follows a tense two weeks in which news reports suggested that powerful landlords could block the proposed Company Voluntary Arrangement (CVA) and potentially take legal action against the firm.
Homebase said that the CVA had been approved by 95.92% of the company’s creditors.
Damian McGloughlin, CEO of Homebase, said: “We are pleased that an overwhelming majority of our creditors, including such a proportion of landlords, have supported the plans laid out in the CVA.
“We now have the platform to turn the business around and return to profitability. This has been a difficult time for many of our team members and I am very grateful for their continued support and hard work.
“We can look to the future with great confidence, and we will be working closely with our suppliers to capitalise on the opportunities we see in the home improvement market in the UK and Ireland.”
The stores identified for closure will shut later this year or early 2019. Up to 1,500 roles will be made redundant as a result.
The company, which had 249 stores at the end of May, suggested last month that without this lifeline, it would have collapsed. It said that its current store portfolio mix “is no longer viable” and “rental costs associated with stores are unsustainable”.
It also said that “many stores are loss making.”
The troubled home improvement firm added: “The CVA enables Homebase to make essential changes to its store portfolio, reducing its cost base and providing a stable platform on which to continue its turnaround.
“Under the terms of the CVA proposal, all creditors receive a better outcome than any other likely alternative.”
Launching the CVA proposal earlier this month, Damian McGloughlin, CEO of Homebase, said: “Launching a CVA has been a difficult decision and one that we have not taken lightly.
“Homebase has been one of the most recognisable retail brands for almost 40 years, but the reality is we need to continue to take decisive action to address the underperformance of the business and deal with the burden of our cost base, as well as to protect thousands of jobs.
“The CVA is therefore an essential measure for the business to take and will enable us to refocus our operations and rebuild our offer for the years ahead.”
The British Property Federation (BPF) said that Homebase and CVA sponsor Alvarez and Marsal had “demonstrated best practice” and so “ensuring property owners’ interests have been properly taken into account.