Home improvements chain B&Q will pay €5 million to repudiate the lease on its Waterford store, the High Court heard yesterday. However, its bid to have several other lease agreements for its stores set aside was adjourned.
The applications brought by B&Q Ireland Ltd, which has been in examinership since the end of January, are part of the process to secure the company's survival. They will now be heard by the court next Wednesday.
The company, which operates nine stores across the State employing 690 people, entered examinership with liabilities of more than €17 million to its parent company, Kingfisher plc.
B&Q cited falling revenues and high rents for its difficulties. A loss of some €20.5 million is forecast for the year ended January 2013.
Declan McDonald of PricewaterhouseCoopers was appointed examiner and is in the process of putting in place a scheme of arrangement with the firm’s creditors. If approved by the High Court, the company can continue to trade as a going concern.
Cost-cutting proposals
As part of cost-cutting proposals, the company's store in Waterford will close with the loss of 92 jobs. It was originally intended to close a second store in Athlone. However, earlier this week, it was announced that that store will remain open.
B&Q believes its business could be viable if its rents are substantially cut and other cost-cutting measures are implemented. It is paying some €11.6 million rent for the stores. It has been advised that is about €5.8 million above open market rents.
Yesterday, Ms Justice Mary Irvine was told by Rossa Fanning for the company that applications to repudiate lease agreements in relation to stores in Galway, Liffey Valley in Dublin, Limerick and Naas could be adjourned on consent to next Wednesday’s sitting of the court.
Counsel said talks were ongoing with the different landlords of those stores.
Counsel said that it had been agreed with landlords James and Bridget Treacy of Butlerstown House, Waterford, that the lease of their store in Waterford can be repudiated as part of the examiner's proposed scheme of arrangement.
The amount of damages for the repudiation of that lease are to be fixed at €5 million, counsel added.
Previously the court heard that B&Q came to Ireland in 2002 and expanded its number of stores during the economic boom. However, turnover had fallen 24.2 per cent from a peak €124 million in 2009 to €94.2 million in the financial year to end January 2012.
The company, which has no debt to the banks or revenue, sought the appointment of an examiner after Kingfisher stated the business was not sustainable and the levels of support required by B&Q Ireland were no longer feasible.
However, Kingfisher has indicated its interest in investing in the company if the business is restructured and a survival scheme is negotiated.
