// Caffè Nero forces away latest threat from Asda owners after filing annual accounts on time
// Issa brothers finalised a deal in April which gave them control of £140m worth of Caffe Nero’s debts
Caffè Nero has seen off the latest threat from Asda owners – Issa brothers – after filing its annual accounts on time and pledging to meet all of its banking covenants.
Issa brothers finalised a deal in April which gave them control of £140 million worth of Caffè Nero’s debts.
Zuber and Mohsin Issa have since sought to acquire Caffè Nero to expand the chain into EG Group, their petrol forecourts business, and potentially into Asda.
Caffè Nero said it has repaid all bank loans from the Covid crisis and is forecast to meet all of its banking covenants for the next 12 months.
Caffè Nero’s annual accounts to the end of May 2020 show a 22 per cent decline in revenue to £239.7 million. It reported a pre-tax loss of £6 million.
Issa brothers agreed to buy Asda for £6.8 billion last year, and made an eleventh-hour bid to wrest control of Caffè Nero from founder Gerry Ford last November.
Swiss private equity firm Partners Group, which sold the debts to the Issas via investment bank Morgan Stanley, has raised concerns with Ford about the prospect of a breach of banking covenants.
Caffe Nero has said it does not expect breaching any of its covenants.
On Friday, Caffe Nero failed in a legal bid to have a challenge by landlords thrown out by the courts.
Landlords have challenged a radical restructuring to cut rents after it emerged that the Issas had lodged a late takeover bid.
Caffe Nero agreed a CVA with creditors last year, which gave its 650-plus landlords 30p for every pound they were owed.
The Issa brothers are currently funding a legal challenge to the CVA which is being pursued by one landlord after eight others agreed settlements.
On Friday, a judge ruled that the legal challenge will go ahead in July.