Lord Sugar joins challenge to Caffè Nero turnaround

Cafe Nero

Lord Sugar, the Amstrad founder and property tycoon, has joined a bid to block a turnaround plan for Caffè Nero, the troubled coffee chain.

Amsprop Investments, his commercial property business, is one of seven parties behind a legal challenge to Caffè Nero’s company voluntary arrangement.

Britain’s third biggest coffee shop chain, behind Costa and Starbucks, has been working with KPMG on a CVA — an insolvency procedure under which companies reach an agreement with creditors, typically to cut rents or close sites — for its UK estate of about 660 Caffè Nero-branded outlets.

Amsprop’s involvement in the challenge, filed on Christmas Eve, is in its capacity as a Caffè Nero landlord. Lord Sugar also counts other high street brands, such as Pret a Manger, Tesco, Boots and Costa. among his tenants.

The main focus of the CVA has been to move the majority of the chain’s stores to a turnover-based rent. If there are any closures, they are expected to be minimal, but landlords are concerned about forfeiting the majority of their outstanding rent bills under the terms of the process.

The billionaire Issa brothers, the petrol station tycoons and owners of Asda, the supermarkets group, have offered to fund the legal challenge in the hope that the CVA fails so that they have a chance to take control of Caffè Nero. They made a failed surprise takeover bid for the business at the start of December only hours before landlords voted on the CVA.

Under the Issas’ offer, landlords were promised full recovery of rent arrears. Other landlords contesting the restructuring alongside Lord Sugar are said to be small property owners that may not have enough resources to fund a legal challenge on their own.