Pizzaexpress has put its uk company on the block and warned of 1,100 work cuts because takes much more extreme action to stave off collapse while the coronavirus crisis deepens the informal eating sector.
The 55-year-old italian pizza pie sequence will shut 67 restaurants 15 % of its united kingdom estate and offload its chinese company included in a sweeping restructuring price agreed with hony capital, the chinese personal equity firm that is the owner of the group.
Hony, which purchased pizzaexpress in a debt-fuelled 900m package in 2014, features agreed to take the chinese arm for the business, leaving pizzaexpresss british and worldwide websites, as well as the brand name, in the control over its senior secured lenders unless a buyer is located.
The arrangement, that'll additionally see 144m of fresh capital inserted in to the business, was created to offer more powerful financial foundations for pizzaexpress after it disclosed net borrowings of 1.1bn with interest charges of 93.1m in april last year.
Half the 144m should be regularly re-finance debt additionally the partner to finance the reopening of their 449 british restaurants. the 67 restaurants earmarked for closing as part of the restructuring will not be reopened.
The company said on tuesday that it in addition planned to its slice debt considerably, from 735m to 319m, hence the exchange would dramatically bolster the group and offer investment to deliver its future growth program.
Andy pellington, chief economic officer, described the offer as a whole means to fix our balance sheet dilemmas.
The uks informal dinner sector, currently damaged by huge oversupply in the market and rising overhead expenses, had been particularly vulnerable entering the pandemic.
At least 15 national stores have actually placed themselves up for sale or appointed advisers since the crisis started.
Some, including casual dining group, the owner of the bella italia and las iguanas companies, and azzurri, which is the owner of ask and zizzi, were sold down in cut-price deals to personal equity houses in recent weeks.
Unlike many other chains, the majority of pizzaexpresss restaurants had been profitable on someone basis prior to the crisis struck, but funding its debt had been evaluating heavily on the team.
Talks for an important financial restructuring was indeed under means since last summertime.
You close to the negotiations said the organization voluntary arrangement that'll allow the chain to exit the 67 underperforming sites was not a do or die matter.
Its a very important component for pizzaexpress, [but] the rent costs is not the largest of these problems, they said.
To be able to secure the business enterprise, any prospective bidder will have to provide over the 465m that pizzaexpress owes to your senior secured bondholders, anyone included.
A resource close to the company said operating a product sales process had been beneficial in order to provide the business a provable valuation while negotiations using its unsecured creditors tend to be ongoing but said which they thought it had been quite not likely a buyer would emerge.
The offer is anticipated to perform into the autumn because of the cva to take place right after that.
David beadle,vice-president of moodys investors provider, said the quantity of money pizzaexpress needed to burn through whilst it had been closed would adversely impact the recoveries for present lenders within the proposed restructuring.
Pizzaexpress features thus far reopened 166 of their restaurants in the uk and stated it in the pipeline to start another 80 on thursday so that you can make use of the governments consume out to help discount plan, which is working throughout august.
Lazard, the financial investment lender, is working the sales process while houlihan lokey and kirkland & ellis are advising pizzaexpress regarding restructuring.
Additional reporting by nikou asgari