Burger King's receivers are proposing five loss-making outlets be shut permanently as they prepare the business for sale.
And, according to the creditors' compromise proposal, suppliers and landlords will get more money if the business is sold for more than $30 million.
The burger chain's New Zealand franchise was bought by private equity firm Blackstone for $107 million back in 2011 through holding company Tango New Zealand.
The company was moved into receivership on April 14, and its owners said they wouldn't put any more money into the business.
The receivers, KordaMentha's Grant Graham and Brendon Gibson, have set a deadline of May 12 for the compromise. If that goes through they'll proceed with the sale of the business.
According to documents lodged at the Companies Office on May 6, $50 million is owed to the senior lenders. The lenders are a consortium of ANZ, ASB and Rabobank, the receivers have previously said.
The banks have agreed to share half of any sale proceeds over $30 million if the company is sold as a going concern, and have forgiven some interest payments. They have also provided an overdraft to assist in the restart of the business.
The receivers estimated the business would remain cashflow-positive until December if the creditors' compromise went ahead.
At April 1, the company had creditors of approximately $11.8 million, plus monthly rents of $1.7 million it could not meet, the documents say.
Under alert level 3, Burger King is operating 71 outlets, with only a dozen, which don't have drive-through facilities, still shut.
If the deal goes ahead, five of Burger King's 83 outlets will never reopen. These are in Courtenay Place and Lambton Quay in Wellington, and Queen St, Takapuna and WestCity Mall in Auckland.
"These five are loss-making restaurants and their closure will improve the profitability and long-term sustainability of the overall business," a spokeswoman said.
"We have advised all team members who work in these restaurants and will do our best to deploy as many as possible to other restaurants. However, redundancies are unfortunately likely."
She said she could not confirm how many job losses as the deal was not yet done.
Burger King's operating company Antares received $11.5 million of wage support for 1,918 employers, according to the Ministry of Social Development's wage subsidy database, updated to April 22.
According to the receivers, this has allowed the company to pay staff at least 80 percent of normal wages for 12 weeks.
"Even though the business has now restarted, it will take time for the company to reach its pre-lockdown trading levels and there is uncertainty as to how quickly trading will recover," the documents said.
"We are not prepared to comment in detail on turnover. However, it has been great to have the restaurants open and, once again, be serving BK's loyal customers," a spokeswoman said in response to BusinessDesk's request for more specific sales figures.
Creditors owed more than $30,000 were categorised class 1 and would be paid 75 percent of what they were owed by the end of the year. Those creditors were owed roughly $10 million, the documents show.
Rents repayments reduced
Smaller creditors would be paid all they were due but over a six-month period.
The biggest supplier listed in the creditor's proposal is chicken supplier Ingham Enterprises, which is owed $1.5 million. The second-biggest creditor is Queensland-headquartered Comgroup Supplies, whose website says it produces "mouth-watering meat patties." It is owed $1.08 million.
Drinks company Coca-Cola Amatil and baker Goodman Fielder are owed just less than $1 million, while potato producer McCain Foods is owed $667,000.
Under the deal, landlords are to receive none of April's rent, 25 percent of May, June and July's rent, half of August and 75 percent of rent in September. The documents do not provide details of who the landlords are.
Inland Revenue has said, if the compromise goes ahead, it would give the business a payment holiday to restart in July this year.
Tango's most recent financial statements for the 2018 calendar year reported steady revenue at $188.3 million from $187.3 million in 2017 but its loss was $72.3 million from a $3.1 million profit the year before.
- text by Victoria Young, BusinessDesk