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Morning Briefing for pub, restaurant and food wervice operators

Tue 4th Aug 2020 - PizzaExpress announces major restructuring plan, begins sale process
PizzaExpress announces major restructuring plan that could see 15% of estate shut, begins sale process: PizzaExpress has announced a major restructuring plan to shore up its finances that could see about 15% of its estate shut. The company said it has also hired advisers from Lazard to lead a sale process for the business. PizzaExpress said an agreement has been reached with certain of its secured creditors and its majority shareholder, Hony Capital, “for a holistic recapitalisation and restructuring transaction that will significantly strengthen the group and provide funding to deliver its future growth plan”. The restructuring involving a significant de-leveraging of the group’s external debt, from £735m to £319m; extension of maturities; and potentially the transfer of majority ownership of the group to its secured noteholders. It also involves a major recapitalisation with the provision of up to £144m of committed new facilities to support the future development of the group’s business. Of the funds, £70m is available to support reopening PizzaExpress restaurants in the UK after an extended period of closure and further strategic development, and £74m is available for utilisation to refinance the group’s existing super senior debt facility, if required. As part of the restructuring, PizzaExpress said it plans to launch a company’s voluntary arrangement in the near future, which could lead to the closure of 67 of its 449 UK restaurants, with up to 1,100 jobs at risk. It stressed the review was being done on a site-by-site basis but said reducing the size of its estate will help it to protect 9,000 jobs. The restructuring also involves the divestment of the group’s mainland China business. PizzaExpress said if the sale process does not result in any third party providing a bid for the group which is higher than the bid of the holders of the group’s secured notes, the holders of the senior secured notes will acquire the business, with individual holders being entitled to receive shares (pro rata) in a new holding company of the group and £200m of new senior secured notes, due in 2025. The company closed all its UK restaurants on 23 March after the government-mandated lock-down. PizzaExpress said customer demand has been “encouraging” at the initial group of 60 restaurants that reopened in early July. A total of 166 restaurants are now open as the Eat Out to Help Out initiative starts and plans for further reopenings are well underway. Andy Pellington, group chief finance officer, said: “While we have had to make some very difficult decisions, none of which has been taken lightly, we are confident in the actions being taken to reduce the level of debt, create a more focused business and improve the operational performance, all of which puts us in a much stronger position. We can now plan to invest in both our UK and Ireland and international businesses as well as support our teams as they return to work.” Zoe Bowley, UK and Ireland managing director, added: “Our business has a long history of success, but the UK-wide lock-down has hit the hospitality industry particularly hard. While the financial restructuring is a positive step forward, at the same time we have had to make some really tough decisions. As a result, it is with a heavy heart that we expect to permanently close a proportion of our restaurants, losing valued team members in the process.”


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