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Stonegate owner transfers stake in company over to debtor
Britain’s biggest pub group has found a way to keep the wolf from the door as it tackles a £3 billion pile of debt.
Stonegate pub group, which runs more than 4,000 pubs across the UK, has been open about its recent financial struggles, triggered largely by its 2019 acquisition of Ei Group for £1.27 billion.
A spokesperson for the company, which owns the Slug & Lettuce and Sports Bar & Grill chains, admitted earlier this year that “a material uncertainty exists that may cast significant doubt on the company and group’s ability to continue as a going concern.”
Stonegate has been seeking ways to refinance its debts since February 2024, and has appointed bankers at Evercore and lawyers at Kirkland & Ellis to explore options.
This week, one of those options materialised in the form of Stonegate owner TDR Capital agreeing to pump £250 million into the company, simultaneously handing over its stake in the group to one of Stonegate’s lenders. The move will see the terms of the company’s debt extended to 2029, which will ease the financial pressure on the pub firm.
Among the lenders said to be included in the refinancing deal is Albacore Capital Group, which will receive a stake in the company in exchange for a cash injection and the right to appoint a director to Stonegate’s board.
Acquired debt
Stonegate racked up much of its debt through its acquisition of Ei Group. Before the purchase, Stonegate owned around 760 sites, a number which shot up to more than 4,000 following the takeover, and as part of the acquisition Stonegate also inherited Ei Group’s existing debt of £1.7 billion.
At the time of the acquisition, Ei Group chairman Robert Walker said the step would “ensure an exciting future for our tenants and employees by creating the leading managed pub company in the industry.”
Despite its debt, Stonegate’s portfolio saw an 8% rise in adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) in its half year results to 7 April 2024, taking its earnings to £196m.
“We have always said we would achieve the right outcome on our refinancing requirements, and I am delighted we can now move forward with confidence and certainty, having achieved our balance sheet goals,” Stonegate CEO David McDowall said this week.
He revealed that the company is “now in a really strong position to deliver on our longer-term objectives.”
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