UK – Stonegate Pub Co., Britain’s largest pub group, is reportedly looking to scale down its portfolio of sites by selling more than a fifth of its estate to pay off mounting debts.
According to a report from Bloomberg, the Slug and Lettuce chain brand owner has debts of up to GBP2.6bn (US$3.2bn) and is looking to scale back its 4,500-site portfolio amid soaring energy bills, widespread staff shortages, and other rising costs.
Citing people familiar with the matter, Bloomberg said the pub operator believed with the sale of around 1,000 of its pubs, the company could raise GBP800m (US$970m) from the sell-off, which the publication said was being advised by the investment bank Eastdil Secured.
Last summer, Stonegate, which is owned by a private equity firm TDR Capital, placed 75 ‘freehold’ pubs on the market, at a reported price of GBP100m (US$121m). It is not clear if these pubs are among those the TDR Capital-owned group is still looking to sell.
Stonegate clinched the crown of being the UK’s largest pub operator just before the onset of the pandemic, when it completed a takeover of rival firm Ei Group for GBP3bn (US$3.63bn) in February 2020.
In March 2021, it sold 42 pubs to RedCat as a condition of its takeover of Ei. The same month, Stonegate reported that it had made a loss before tax of £746m (US$903.8m) in the full year to 27 September 2020, following the purchase of Ei Group, and as a result of the pandemic.
Speaking about the timing of the completion of the deal for Ei at MCA’s Pub Conference last summer, Ian Payne, Stonegate’s chairman said that in the space of 17 days, the group’s sense of elation turned to sheer horror as the grim reality of Covid-19 began to sink in.
“I’m sitting there with a £1.5bn (US$1.82bn) debt…and no business. [It’s] something I never want to go through again in my life,” he recalled.
In the latest interview with the morning Advertisers, Payne said: “The biggest concern is energy. We know what we’re going to pay in February and March, but we still don’t know what we’re going to pay beyond that.”
During the reporting period, the group received a cash injection from owner TDR Capital of £50m (US$60.57m) and raised a further £120m (US$145m) in debt markets.
The reported move comes at a time when the UK hospitality industry is beleaguered. The value-focused pub chain Wetherspoons has also announced plans to sell 45 of its venues, as chairman Tim Martin warned that pubs faced a challenge in luring drinkers back into venues post-pandemic.
Last month, Fuller Smith & Turner announced a profit warning, blaming rail strikes for lower sales in the run-up to Christmas.