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Fri 23rd Apr 2021 - Exclusive – Pret receives £185m cash injection from shareholders, completes further refinancing
Exclusive – Pret receives £185m cash injection from shareholders, completes further refinancing: Pret A Manger, the JAB Holdings-backed chain, has received a cash injection of £185m from shareholders and completed another refinancing to support the business through the pandemic. The refinancing has extended the £150m revolving credit facility it secured in May 2020 until December 2021 with an optional extension, subject to lenders’ consent, for a further six months. A further waiver of existing covenants, which has been in place since the second quarter of 2020, has been obtained for the period until September 2022. No dividends will be paid during the covenant waiver period. In the third quarter of 2020, legal proceedings against the company by customers based on operational incidents were concluded, resulting in no further action being taken against Pret. As a result, a provision of £2m was released. Pret stated: “Throughout 2020 and until to date, the covid-19 outbreak has had a significant impact on the operations in all the group’s markets. During 2020, the group underwent significant organisational restructuring to reduce its cost base. This included closing 39 Pret and 33 EAT branded shops in the UK and 22 shops in the US and reducing the number of employees through 3,771 UK redundancies and 1,292 US redundancies with a cost of £15.3m. As the situation continues to evolve, it is not practicable at this date to quantify the potential full financial impact of the outbreak on the group. It is likely to have a significant impact on the carrying amounts of both shop and right-of-use assets; these are non-adjusting post-balance sheet events. Various initiatives were taken to continue to protect the group’s ongoing liquidity. In March 2020, the group drew down £55m of its revolving credit facilities to provide ongoing liquidity to the group; during the remainder of 2020, a further £8m was drawn down such that, at the end of 2020, £88.5m of the £100m revolving credit facility was drawn. In May 2020, the group entered into new bank facilities totalling £150m to provide additional liquidity to the group. In addition, the group had agreed a four-quarter covenant waiver with its lenders from the second quarter of 2020 to the first quarter of 2021. In February 2021, the group obtained an equity injection of £185m from its existing shareholders and underwent a further refinancing to extend the additional backstop facilities totalling £150m to December 2021 with an optional extension, subject to lenders’ consent, for a further six months. In February 2021, the group repaid £88.5m of the revolving credit facility. All the supply chain financing liability of £73.1m outstanding as at 31 December 2019 has been repaid. At the date of signing the financial statements, the supply chain financing liability is £24.4m. On 16 October 2020, the group entered a shareholder standby facility to provide additional backstop liquidity. On 5 March 2021, this has been increased to £100m and extended until September 2022. After the balance sheet date, the company received £115.3m in funding from its parent entity, Pret A Manger. The Pret leadership team recognised, early on, during the pandemic, it was up to Pret to decide its own future and the business must adapt to the long-term economic and social changes that the pandemic accelerated. Pret has since fundamentally transformed its business model, delivering significant change in one year to meet the changes in consumer demand. At the heart of this transformation was establishing eight new trading channels, which are providing new revenue streams including the UK’s first coffee subscription service, a significantly expanded online delivery offer, a new range of Pret consumer packaged goods available through leading retailers, and a new dinner delivery menu. The evolution of the Pret business model to a multi-channel business has, therefore, started to reduce business exposure to the likely shift towards more home working. Extensive measures have also been taken to reduce the group’s cost base and minimise cash outflows, alongside utilising government support schemes to furlough colleagues, defer tax payments and benefit from UK business rates relief. The group received funding during 2020 and 2021 from the UK government under the Coronavirus Job Retention Scheme.” The details were revealed as Pret reported revenue for its UK business was down slightly to £708.4m for the year ending 2 January 2020, compared with £710m the previous year. Adjusted Ebitda grew to £141.2m from £91.4m the year before. It made a pre-tax loss of £26m, compared with a profit of £48.8m the previous year. Meanwhile, the company’s US business reported revenue for the year ending 2 January 2020 stood at £179.2m, compared with £179.7m the year before. Adjusted Ebitda was up to £25.5m from minus £3.8m the previous year. It reported a pre-tax loss of £38.4m, compared with a loss of £30.8m the year before.

Brands with big UK growth plans lead the updated multi-site database, only available to Propel Premium subscribers: The updated Propel Premium multi-site database, which will be sent to Premium subscribers next Friday (30 April) at midday, has gained an additional 84 companies during the past month, many of which have big growth ambitions in the UK. Subscribers will receive a 4,600-word report on the 84 new brands, concepts and growth companies. They include: Popeyes Louisiana Kitchen, founded in the US in 1972, has announced plans to enter the UK this year, as has Japanese udon noodles and tempura restaurant company Marugame Udon, with a July opening planned for Spitalfields and a second site at The O2 to follow. Others include Australia’s largest Mexican quick-service franchise Zambrero and South Korea’s leading fried chicken brand Pelicana. Doppio Malto has chosen Glasgow for its first opening in the UK, with the owner citing Italy’s connection with the city for the decision – it is the first of 100 planned sites. Miso Group, co-founded by Canadian chef Adria Wu, is planning a UK rollout of a technology-led Middle Eastern-inspired concept called Operation:Falafel. Hero Brands-operated healthy eating concept Choppaluna, has announced a UK rollout, with two London sites being looked at to complement its flagship site in Bloomsbury. The debut site for JiJi’s, a new Israeli-Japanese dining concept, will launch in London’s Islington Square development in June. Meanwhile, Australian entrepreneur Dennis Turner and former Deliveroo global head of restaurant strategy Cengiz Rahmioglu are to launch a Thai-focused concept called Burning Rose. The exhaustive database now holds the details of 1,713 companies – and is only available to Propel Premium subscribers, who will receive the updated list on Friday, 30 April. The go-to database has the most comprehensive multi-site operator information in the sector – it provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different, and what each business specialises in. In a new feature this year, there is a synopsis of what the business does and significant news associated with it. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The regular single subscription rate of £395 plus VAT for operators and £495 plus VAT for suppliers remains the same. Premium subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and now also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. In today's (Friday, 23 April) Premium Opinion column, Propel insights editor Mark Wingett looks at EG Group’s deal for Leon, where the brand goes next and the fight for roadside revenue. At the same time, he looks again at the rent situation. Propel Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Mark Wingett. Email to sign up.

Tim Hortons to expand to north east of England: Canadian cafe and bake shop Tim Hortons is to expand into the north east of England. SK Group, which is leading the rollout of Tim Hortons in the UK, will open a drive-thru in Washington this summer, with a site in Boldon opening shortly after. Located at Galleries Retail Park, the Washington venue, which will create more than 50 jobs, will offer dine-in for up to 105 guests and drive-thru services. Delivery options will also be made available to the local area. Tim Hortons will also be launching a drive-thru venue in nearby Boldon, creating a further 40 jobs. The two launches form part of the brand’s plan to create more than 2,000 jobs across the country, bringing Tim Hortons restaurants to every major town and city by 2022. Kevin Hydes, chief commercial officer of Tim Hortons franchise in the UK, said: “The north east has been an area of interest to us for a long time and so we’re thrilled to bring our first Tim Hortons restaurants to the region. We have a huge fan base here and have had many requests to bring the brand to the area, so we expect it to be hugely popular with the local community and fans from neighbouring cities.” Tim Hortons currently has 27 restaurants in the UK.

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