Exclusive – Stonegate gives landlords more time over restructuring plan, following ‘constructive and positive engagement’: Advisors to Stonegate Group, the UK’s largest pub company, have written to landlords of its leasehold estate to provide them with more time to consent to its proposed restructuring plan, following “constructive and positive engagement from much of the landlord community”, Propel has learned. Earlier this year, Stonegate appointed advisers to help it to streamline its structure. The company, which has more than 4,300 sites in the UK, is working with FRP Advisory as it seeks to implement a series of strategic measures, including simplifying the company's structure, which could include a “consensual restructuring plan” for its leasehold estate, which makes up less than 10% of its portfolio. The proposal is titled Project Pegasus, and it was understood that landlords had until the end of last month to reach agreement on the plans, but that has now been extended until the end of June. In a letter to an impacted landlord seen by Propel, FRP said: “A core objective is to transition to a significantly simplified group structure that better supports investment, governance and operational control. This will be achieved through the introduction of a new holding company structure under Stonegate Group Limited. Under this structure, all viable leases (Categories 2 and 3) will be transferred into brand-specific operating subsidiaries, rather than spread across multiple legacy entities. To ensure the long-term sustainability and viability of the business, it will be necessary to rebase current rents to reflect prevailing economic conditions. This will require reductions in headline rent between 30% and 50% depending on underlying site performance.” If consensual agreement isn’t reached, those sites in what FRP calls Category 1 will either close or have already been closed and will not form part of the go-forward business. It said that limited funding is available to support consensual agreements concluded prior to 24 June 2026. It said: “In this context, we can offer Category 1 landlords a payment equivalent to six months’ rent in consideration for an immediate, full and final surrender of their leasehold interests. We consider this to represent a materially better outcome than may be available to landlords through any potential future restructuring process, given the level of secured debt within the group, which would rank ahead of landlords’ claims. After 24 June 2026 limited funds for surrender premiums cannot be guaranteed. Landlords unwilling to reach a consensual agreement will not transfer to the new group structure and therefore remain at risk and potentially subject to a more formal restructuring process which may prove essential for the group’s future viability. Regarding leases where new terms have not been agreed for an assignment or those not consensually surrendered, following any restructuring process, there should be no expectation from landlords that those lease obligations will continue to be funded. Recent failures of The Revel Collective (Revolution) and BrewDog clearly demonstrate the dangers to landlords when restructuring processes become unavoidable.” The letter goes on to state that the majority of asset value in the existing subsidiaries is attributable to the freehold properties. FRP continued: “Should a restructuring process become unavoidable, given the level of secured debt in the group, it should not be assumed that there would be any value available for unsecured creditors, e.g. landlords from the sale of these freeholds.” To date, FRP said it had “received constructive and positive engagement from much of the landlord community, who have recognised the benefits of resolving matters consensually”. It said: “Early engagement maximises the potential for higher surrender premiums for Category 1 landlords and minimises the extent of rent reductions that are required to achieve viability for the Category 2 and 3 Landlords.” It said that its appointed advisor, Cedar Dean, has had its mandate “extended to the end of June, as a matter of urgency”. Talking to Propel last month, Stonegate chief executive David McDowall said: “We’re working hard to mitigate in our leasehold estate the impact of everything that everyone else is fighting against – the impact of inflationary pressure, the impact of legislative pressures. So, the whole project is about us trying to ensure that high street leasehold estate is viable. And we're looking at options to achieve that. We’re going to see, in most cases, a positive collaborative approach with our landlords.” Stonegate chief executive David McDowall to speak at Excellence in Pub & Bar Retailing Conference, open for bookings: McDowall will be among the speakers at the Excellence in Pub & Bar Retailing Conference. The all-day conference takes place on Tuesday, 19 May at One Moorgate Place in London and is open for bookings. McDowall will talk about the continued evolution of the UK’s largest pub company, as it looks to become a “partnership-led pub portfolio”. For the full speaker schedule, click here. Tickets are £345 plus VAT for operators and £395 plus VAT for suppliers. There is a 20% discount for operators and suppliers who are Premium Club subscribers while Premium Unlimited Plus subscribers receive four free tickets to the conference. Email: kai.kirkman@propelinfo.com to book places.