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Sat 6th Mar 2021 - Exclusive: Cain International acquired Prezzo out of administration for circa £5m
Exclusive – Cain International acquired Prezzo out of administration for circa £5m: Cain International, the privately held investment firm operating in Europe and the US, acquired the majority of the Prezzo business from its administrators through a pre-pack arrangement, for £5.04m, Propel has learned. The deal, which was supported by the company’s material secured creditors who held circa £56m of secured debt, saw Cain acquire 156 of the Karen Jones-chaired Prezzo’s 178 sites, with the remaining 22 restaurants closed. The £5.04m comprised cash of £2.64m and debt of £2.4m. At the outset of the covid-19 crisis, Prezzo was put into hibernation, furloughing the majority of its staff, limiting outgoing payments to a minimum and engaging in discussions with key stakeholders – for example HM Revenue & Customs and landlords. Between March and July 2020, home delivery capacity was doubled to expand the group's “Dine at Home” channel. Notwithstanding the actions taken by management, the ongoing headwinds resulted in a £14m forecast funding requirement and as a result an independent M&A advisor was engaged to run a sales process in June 2020. The M&A process saw 58 parties contacted with 21 parties signing non-disclosure arrangements and accessing additional information made available to them. Four parties entered discussions with management with the process ending with two offers. Both offers were similarly structured and ultimately Cain’s offer was accepted and transacted. Cain agreed to purchase the group on 2 December 2020 and completed the transaction on 16 December 2020. The consideration included a material discount for the group debt facilities that totalled £57m and a nominal amount being paid for the group equity. An administrators’ report stated: “Following the December transaction, the extent and likely prolonged duration of the third national lockdown became apparent. Despite a number of landlords actively engaging in discussions to address arrears and ongoing rent liabilities it became clear these discussions would not be concluded at a sufficient level and in a suitable time-frame to overcome the additional headwinds the third lockdown had presented. In the face of ongoing uncertainty, Cain concluded it was no longer able to support the business on a solvent basis. However, it also informed the directors it was in the process of preparing an offer to acquire the business and assets of the group by way of a pre-pack sale.” Since the December transaction, Cain had provided circa £2.4m of funding in order to provide liquidity that enabled Prezzo to make business critical payments and ensure the overall position of creditors was not materially worsened ahead of the transaction. It was not, however, willing to fund another accelerated M&A process. The report stated: “In any event, and as previously noted, the M&A process in 2020 did not give rise to an offer that redeemed the secured lenders in full. Since the December transaction, the position of the group and the market has further deteriorated. Cain has confirmed it would not countenance an offer unless it provided a material return over and above its initial investment. The group also instructed Gordon Brothers International (GB) to carry out a valuation of the furniture and equipment held at the sites. The purpose of the valuation was to ensure the transaction provided a better return to the group's creditors than would have been the case in a winding up. The ex-situ value provided by GB was £1.2m prior to the costs of realisation, which were expected to be significant given the assets were spread across the group's 178 restaurants (at an average asset value of circa £7,000 per site).” Two years ago, Prezzo underwent a company voluntary arrangement that saw one third of its circa 300 sites close and a subsequent debt-for-equity swap completed. Private equity firm TPG took Prezzo private in a £303.7m deal at the end of 2014.

Covid variants will not hold UK back, says top scientist: New variants of covid-19 are “very unlikely” to stop Britain getting back to normal in the summer, according to the scientist in charge of tracking strains of the virus. Professor Sharon Peacock, head of the Covid-19 Genomics UK scientific body, told The Times the country was now well equipped to “stay ahead” of the virus by adapting vaccines quickly. She was “very optimistic” that immunisation would allow Britain to ease restrictions as planned. Schools in England will reopen to all pupils on Monday (8 March) in the first stage of the lockdown easing, with all restrictions due to end by 21 June. The emergence of new variants that could be resistant to vaccines is seen as the most significant risk to the timetable. However, Peacock said strains that were less susceptible to the vaccine were showing no signs of surging and may not take off in Britain as they had elsewhere. She said the present crop of vaccines were “very effective against pretty much everything that’s circulating” and it would be feasible to adapt them regularly to ensure that immunity was maintained. “Because immunity wanes to coronaviruses, even without the variants we probably were looking at booster doses,” she said. “It’s just the booster doses we get will need to take account, like for flu, of the circulating variant that you’ve got.” The professor’s comments came on another day of positive data, with coronavirus cases and hospital admissions at their lowest since October. The government has made the risk from new variants one of its four tests for easing the lockdown. Business secretary Kwasi Kwarteng told The Times he was optimistic people would be able to enjoy a “normal summer” and the economy was on track for a strong recovery, which could mean there was no need to raise corporation tax in 2023.

Pubs deluged with beer garden bookings: England's pubs have been deluged by people eager to book space from when beer gardens reopen on 12 April, UKHospitality has said. From that date, pubs are expected to be able to serve customers sitting outdoors. One Leeds pub reported it had taken in 700 bookings in just five hours this week. Demand has been so high scammers have even taken to advertising fake pub bookings. When the Water Lane Boathouse pub in Leeds announced on Wednesday (3 March) bookings were open, it had more than 700 in just five hours. “Please bear with us as we work our way through them,” it told customers on Twitter. Pubs in most of the UK have been closed to sit-in customers during the latest lockdown, creating pent-up demand. UKHospitality chief executive Kate Nicholls told the BBC: “Our members that can open outdoor areas have reported strong interest from customers, which is not surprising after such a long period of closure.” During the most recent lockdown, pubs in England have been allowed to serve takeaway food and non-alcoholic drinks until 11pm, but not takeaway alcohol. Pubs have been closed to customers wishing to sit in throughout the UK. In Scotland, alcohol cannot currently be sold for outdoor consumption, while venues are closed on the mainland except for takeaways picked up outside the premises, although they are open on some of the islands. Hospitality venues on the mainland are set to reopen from about 26 April. In Wales, pubs can sell takeaway drinks if licensed, and in Northern Ireland, takeaway off-sales must stop at 8pm.

Deliveroo to distribute £50m funding pot to help restaurants and communities: Deliveroo will distribute a £50m funding pot to restaurants, riders and community groups as it seeks to portray itself as a responsible corporate citizen following a flotation that could value it at about £7.5bn. The company will launch the Communities Fund after an initial public offering in London that will be formally unveiled on Monday (8 March), reports Sky News. The five-year pot of money will be earmarked for grants to restaurants to assist them with the cost of reopening after the nationwide lockdown, delivering meals to vulnerable groups and helping its army of riders access affordable electric bikes. Deliveroo's founder and chief executive Will Shu said: “Customers, restaurants and riders are at the heart of their local communities – and that's what we care about too. Being recognisable in the community isn't enough; being part of local communities is what matters. We want to support the initiatives that matter most to our riders, restaurants and riders.” Half a dozen investment banks, led by Goldman Sachs and JP Morgan, have been lined up to oversee the flotation, which will take place at a big premium to a $180m fundraising announced just weeks ago. Deliveroo recently announced plans to expand into a further 100 towns and cities across the UK, enabling it to reach an additional four million people. Earlier this week, it confirmed it would float in London with a dual-class share structure for three years that will allow Shu to retain control of the company. Deliveroo now has about 45,000 restaurants on its platform in the UK, and it has recently started allowing customers to reward riders after their delivery has arrived.

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