Buzz Bingo to close more than a quarter of UK clubs
Buzz Bingo is to permanently close more than a quarter of its UK bingo halls, with over 500 employees set to lose their jobs.
The operator – formerly Gala Bingo – has announced that 26 of its 91 bingo halls in the UK are to close due to what the company expects will be an “unsustainable operating environment” for the foreseeable future.
Some 573 of its 3,400 employees will be potentially impacted by the decision, with most having been furloughed since Buzz Bingo’s venues closed on 21 March due to the novel coronavirus (Covid-19) outbreak.
Buzz Bingo released the details as part of a company voluntary arrangement (CVA) following a period of productive consultation with its various stakeholders, including landlords. It said it has reached agreements with landlords to better align the rents of certain clubs relative to forecast trading.
Buzz Bingo’s owner, Caledonia Investments, has indicated its willingness to provide an additional £22m of equity capital once the CVA becomes effective, which is in addition to the £5m that it invested in Buzz Bingo in May 2020.
Chris Matthews, chief executive of Buzz Bingo, said: “The ongoing pandemic has had far-reaching consequences for the entire leisure and hospitality sector and an immediate and significant impact on our business.
“Following a thorough review of our options, the proposed CVA will restructure our retail portfolio to ensure we are well positioned for a return to growth, while adapting to the ongoing, challenging environment as we start to reopen the majority of our clubs.
“Our lenders are supporting our plans and our owners, Caledonia will be investing into the new structure to further strengthen our future business.
“The restructure will, very sadly, impact a number of our colleagues and my priority is to support all those affected and keep them fully informed as we continue with this process. I would like to thank every single one of our colleagues for their continued understanding and commitment over this period.”
Buzz Bingo said it will seek creditor approval of the CVA Proposal, which is due on 3 August. The online business will continue to trade as usual during this period.
The majority of Buzz Bingo’s clubs are set to reopen from 6 August, with the operator saying it is eager to secure a sustainable long-term future for the business and its remaining 2,800 employees. Bingo halls in Edinburgh Westerhailes, Milton Keynes, Salford and Wolverhampton are among those that will close.
Buzz Bingo said that since lockdown it has sought to reduce the impact by minimising costs, reducing senior management pay and making use of the Government’s furlough scheme.
“Despite this, Buzz Bingo’s daily operations and its ability to generate revenues from its retail club portfolio has been severely impacted,” it said in a statement.
“The management believe the proposed CVA provides the best possible outcome for all of Buzz Bingo’s stakeholders as it looks to secure a sustainable long-term future for the business and its remaining employees.”
Gala Leisure completed a £40m (€46m/$53m) transformation of its Gala Bingo division to Buzz Bingo in 2018, with its website and around 100 venues rebranded. This came after investment trust company Caledonia Investments acquired the division from Gala Coral Group for a total consideration of £241m in 2015.
Melanie Leech, chief executive of the British Property Federation (BPF) which is a trade association for UK residential and commercial real estate companies, said it has worked closely with Buzz Bingo on developing the CVA plan.
“These situations are never easy, particularly now for the retail, hospitality and leisure businesses on our high streets at the sharp end of the Covid-19 pandemic,” she said.
“Property owners, however, need to take into consideration the impact on their investors, including the millions of people whose savings and pensions are invested in commercial property, as they vote on any CVA proposal.
“Buzz Group and AlixPartners engaged with the BPF before launching this CVA proposal. This has provided us an opportunity to improve understanding of property owners’ interests and concerns, but ultimately it will be for individual property owners to decide how they will vote on the CVA.”