Regus files for Chapter 11

Troubled office provider Regus is aiming to return its struggling US business to profitability by filing for bankruptcy protection in America, it said today.

The group, currently the subject of takeover attention, said its US subsidiary had filed a voluntary petition for Chapter 11 bankruptcy relief in order to strengthen its financial position.

Chapter 11 gives a company time to reorganise itself by giving it protection from its creditors.

Regus said the move meant it could reorganise property leases with landlords while maintaining its normal business operations.

Chief executive Mark Dixon said: “Regus is wholly committed to its global strategy in which the US market is a key component.

“Our clear objective is to return our US business to profitability and Chapter 11 is now the quickest and most reliable route to secure this.”

He said his aim was for the US business to be capable of generating profits when it emerges from Chapter 11. The firm expects to exit Chapter 11 within 12 months.

The statement comes a week after New York investment company Indigo Capital admitted it was considering bidding for Regus after building up a 15.11% stake in the group.

It has been making the running for the firm since the New Year and is reported to have also built up a stake through broker Cantor Fitzgerald.

It is thought that Indigo covets the group’s US arm which has been under the greatest pressure of late.

Once a stockmarket darling, Regus’s value soared in the tech boom as Mr Dixon sought to cash in on the growing demand for office space from new firms.

But expanding in the US was seen by critics as a mistake – Regus grew aggressively in America at a time when rents were falling and vacancy rates rising.

Figures out in November showed group operating losses for the three months to September 30 widened from €3.7mm to €19.8m.

Once valued at €3bn, the business was given a vital lifeline last month when venture capitalist Alchemy spent €86m on a stake in its UK arm.

At the time the group, based in Chertsey, Surrey, said the only alternative was to place parts of its business into administration.

Regus operates 419 centres in more than 240 cities in 52 countries and has in excess of 57,000 customers using its centres on a daily basis.