By Angela Green: Stonegate issues alert saying it is no longer able to guarantee its continuation as a going concern.
Stonegate has advised investors that it can no longer guarantee its continuation as a going concern due to difficulties in trying to refinance its £2.2 billion debt pile. The group owned by venture capitalists TDR Capital operates circa 4,400 UK pubs across the UK including the Slug & Lettuce and Be At One chains.
The pub group is struggling to find financiers willing to provide new loans to replace debt due for current repayment in June next year. While talks with potential lenders are understood to be under way, the failure to agree a new facility by the time the company published its annual report left it with no choice but to issue an alert about its financial position.
In their annual report Stonegate reported: “Since the refinancing plans haven’t been executed, there is an indication that a material uncertainty exists that may cast significant doubt on the company and group’s ability to continue as a going concern.”
Adding that this meant the group “may be unable to realise their assets and discharge their liabilities in the normal course of business”.
Stonegate is domiciled in the Cayman Islands and ultimately owned by TDR Capital, a private equity firm that also owns Asda.
It became the UK’s largest pub group with the £1.3 billion purchase of Ei Group, formerly Enterprise Inns, in 2019, a deal that included £1.7 billion of debt.
The enlarged business has been trying to refinance its debts since at least February, when Bloomberg reported that it had appointed bankers at Evercore and lawyers at Kirkland & Ellis to explore its options.
But despite Stonegate’s scale, it has yet to do so, amid tough conditions in debt markets and for hospitality groups in particular.
The sector’s difficulties, coupled with the high interest rate environment, is understood to have made it far harder for major hospitality players such as Stonegate to refinance their debts.
Stonegate has more than £3 billion of debt in total and paid more than £300 million in finance costs last year, including £235 million of interest on its loan notes. It borrowed £638 million against about 1,000 freehold properties in December but the rating agency Fitch said in January that it may have to downgrade Stonegate’s outlook if it cannot refinance £2.2 billion of loans.
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