Stonegate Pub Co. is working on options to raise new debt against 1,000 pubs, according to people familiar with the situation, as plans to sell off the portfolio have so far been unsuccessful.
(Bloomberg) — Stonegate Pub Co. is working on options to raise new debt against 1,000 pubs, according to people familiar with the situation, as plans to sell off the portfolio have so far been unsuccessful.
Britain’s biggest pub chain, owned by private equity firm TDR Capital, is proposing splitting off the group of about 1,000 outlets into a special-purpose vehicle and using it to raise debt from outside parties. Stonegate, which would manage the vehicle, has appointed EastDil Securities and Barclays to canvass offers, according to the people.
Stonegate, which has about 4,500 pubs, needs the cash to pay down existing debt, acquired through years of rapid expansion since it was created in 2010. The move comes as interest rates have been surging, making it tougher and more expensive for many borrowers to raise funds.
When Stonegate bought Ei Group, formerly Enterprise Inns in 2019, it said it planned to eventually sell a package of pubs.
Over the summer, ratings firm Moody’s Investors Service revised the outlook on Stonegate to negative, as more than £2 billion ($2.4 billion) of maturities in July 2025 are fast approaching. Moody’s forecasts the ratio of net debt to profits to be more than eight times at the end of this year.
Stonegate’s junk bonds due in 2025 are currently quoted at 94 pence on the pound, according to pricing compiled by Bloomberg.
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A representative for Stonegate declined to comment.
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