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Sun 4th Mar 2018 - Update: Prezzo CVA details, Carluccio's, Hawthorn, The Restaurant Group
Prezzo sees debts soar to £220m as it details CVA proposal: Prezzo owes banks and suppliers almost £220m, documents have revealed, as it launches a plea to landlords to reduce its rent bill in order to keep trading. Prezzo has published the details of its proposed Company Voluntary Arrangement (CVA) to reduce its costs by moving to paying rents monthly and lower its rents by up to 50%. It also plans to close up to 94 restaurants, including its entire Tex-Mex chain Chimichanga. According to the terms of the proposed CVA, which has been published on Prezzo’s website, leases on the 94 restaurants that will shut will be terminated in the next eight weeks. Sites that will be closed include Prezzos in Deansgate in Manchester and Wandsworth in London. The CVA documents show it owes secured creditors including Barclays Bank and the Royal Bank of Scotland £154m, while scores of unsecured creditors are owed a total of £65.7m. Among these, Prezzo owes about £600,000 in unpaid electricity bills to British Gas; £364,000 to Reynolds Catering Supplies, a fruit and vegetable wholesaler; and almost £120,000 to furniture company Boston Interiors. Prezzo embarked on a massive expansion after it was bought by private ­equity house TPG Capital in 2014 for £300m. Directors blamed a significant increase in costs from wages and business rates for its financial difficulties and difficult trading. “The directors have concluded, for a number of reasons, that Prezzo’s current business model and associated cost structure is no longer viable in a number of cases,” the CVA document said. “It is envisaged that by the exit of loss making and marginal sites, capital investment can be focused on the core estate where the largest return potential exists. This will improve multiple key indicators, including an average sales ratio of £15,000 per week and FY19 group Ebitda margin by up to 5%. The like-for-like performance of the core estate is expected to remain broadly flat in FY18 and improve to 5% by FY20.” AlixPartners is advising on the restructuring and creditors will vote on the CVA later this month.

Carluccio’s hires advisers to look at options: Carluccio’s has hired advisers to look at strategic options. The company, which has 102 outlets in the UK, has become the latest brand to hire restructuring experts. It is understood to be working with KPMG, according to industry sources. It follows a change of leadership with former chief executive Neil Wickers stepping down in January after three years in the post. He was replaced by Goals Soccer Centres boss Mark Jones, who previously headed Pizza Hut’s UK business. Carluccio’s was co-founded by Antonio Carluccio, the restaurateur and television chef, who died last November. He cut his stake substantially more than a decade ago. Industry sources said Carluccio’s has yet to take much remedial action to deal with the pressures being faced by the industry. However, any action by Carluccio’s, which is backed by Dubai-based Landmark Group, is not thought to be imminent, reports the Sunday Times.

Hawthorn Leisure to review options: Hawthorn Leisure, the 312-strong pub company formed in 2013, has appointed advisers to look at options, including a potential sale. It is understood the group is in the early stages of a sales process that could value it at between £115m and £135m, reports the Sunday Times. Hawthorn Leisure was founded by former Merrill Lynch banker Noah Bulkin, who bought 275 pubs from Greene King for £75.7m with New York investment company Avenue Capital. It later took on 80 pubs from the collapsed property group R&L, belonging to tycoon Robert Tchenguiz, before selling off unprofitable sites. Revenues for Hawthorn, which makes its money by collecting rents from its leased and tenanted pubs – most of which are freehold – were £41.5m last year.

Restaurant Group looks to sell prime sites: The Restaurant Group is looking to sell some of its prime sites amid mounting pressure in the sector. The company is inviting offers for its flagship two-storey Chiquito restaurant in London’s Leicester Square. After grappling with poor trading across much of its estate of more than 500 restaurants and pubs, which also include the Joe’s Kitchen and Coast to Coast brands, the group is “exploring options” for more of its sites, reports The Sunday Times. The proposed sale of the prestige London location follows the closure of more than 40 sites over the past two years. The Restaurant Group, whose shares have fallen almost 30% in the past year, closing on Friday (2 March) at 230.4p, will report full-year results this week. The stock has dropped more than two-thirds since its peak in February 2015. Yet a number of hedge funds are still betting that the price will fall further – with almost 10% of the shares on loan to short-sellers. Analysts at Shore Capital predicted The Restaurant Group’s full-year revenues will fall to £669m, down from £710.7m in 2016. Pre-tax profit, adjusted for exceptional costs, is forecast to fall from £77.1m to £57m. The company, has had to discount aggressively to maintain sales. It has cut prices at its main brands, yet the lower prices have hit profits. A trading update in January revealed like-for-like sales in 2017 fell 3%, and chief executive Andy McCue said he planned to ramp up investment and openings in the better-performing pubs division. While its high street and retail park sites have felt the pinch, the pubs and concessions division, mainly at airports, has delivered better performance.

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