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Fri 18th Feb 2022 - Exclusive – Pret extends funding facility by £100m, expects significant bank refinancing during 2022
Exclusive – Pret extends funding facility by £100m, expects significant bank refinancing during 2022: Pret A Manger, the JAB Holding-backed business, extended its undrawn shareholder standby facility from £100m to £200m last month, and expects a “significant bank refinancing during 2022”. In full-year accounts to 31 December 2020 for its subsidiary Pret A Manger, the business said in March 2021 the shareholder standby facility available to the group of £75m was increased to £100m and extended to September 2022. Last month, this was increased further to £200m and extended to July 2023. In March 2021, the group also converted £100m of its term loan facility into a revolving credit facility. In November 2021, the group received an additional equity injection of £105.7m from its existing shareholders, including co-founder Sinclair Beecham, to help with its plans to double the size of its business within the next five years. The company said: “In February 2021, the group to which the company belongs 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, at the lender's discretion, for a further six months. In December 2021, the group agreed a further extension of £66.7m of these facilities to June 2022 and at the date of signing these accounts had repaid £83.3m of the additional backstop facilities. A further waiver of existing covenants has been obtained for the period until September 2022. No dividends will be paid during the covenant waiver period. In carrying out the going concern assessment, the directors of the group have considered a base case scenario and stress test scenarios. In most scenarios the forecasts reach a minimum liquidity point in August 2022 with the business turning to cash generation in the second half of 2022. Management have considered a trading stress test scenario to apply sensitivities to their base case scenario. The trading stress test scenario considers Pret's two largest markets the UK and US achieving a slower recovery up to August 2022 that demonstrates the liquidity covenant can still be met. Management's intention is to negotiate, with the banking group, both the extension of the debt which matures in June 2022 and the minimum liquidity threshold to July 2023 and are confident in its ability to do so. If this is not successful, the group will, under both the base case and trading stress scenarios, be required to draw down a significant amount from the shareholder standby facility to comply with the original leverage covenant from September 2022. The directors of the group have also considered a reverse stress test scenario with further periods of restriction and a slower sales recovery. The successful vaccination programme and the easing of restrictions in January 2022 in the UK (Pret's largest market) supports the directors view that the reverse stress case scenario is unlikely, although given the footfall levels during sustained lockdowns in 2020 and 2021, there are uncertainties over the recovery of sales due to the unpredictability of consumer behaviour. Management have also considered events that fall immediately after the going concern assessment period. There is expected to be a significant bank refinancing during 2022 for the main facility expiring in July 2023. Management is confident based on continued bank support through the pandemic and strong banking relationships that the future required refinancing will be successfully negotiated.”
Pret features in Propel’s Turnover & Profits Blue Book, which is updated monthly for Premium subscribers and now features 536 companies. Pret has turned over an average of £586m in the past five years. The Blue Book, which is produced in association with Mapal Group, provides a five-year overview of turnover and profit, ranks companies according to turnover, pre-tax profit and profit conversion. The Blue Book also provides details of directors’ earnings and highest paid directors. 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 single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email jo.charity@propelinfo.com to sign up

Pret increases price of filter coffee by 50% in some stores compared with pre-pandemic: Pret A Manger, the JAB Holding-backed chain, has raised the price of a filter coffee by 50% in some of its stores compared with pre-pandemic.The cost of a filter coffee has risen from a pre-pandemic 99p to £1.50 in shops at train and tube stations while a standard flat white has risen from £2.85 to £3.15 in recent weeks in station stores. The company tweeted: “We never take the decision to raise our prices lightly, but higher operating costs mean we sometimes need to put our prices up. We feel that we are still competitively priced whilst offering excellent value for money with fresh food, high quality ingredients and great service.” Pret currently uses Arabica coffee beans in their signature coffees, which has shot up by 40% in price since 2020. This comes after Propel exclusively revealed earlier this month that Pret’s coffee subscriptions would be going up from £20 to £25 a month from 16 March for existing users. The price hike is already in place for new customers, with Pret claiming it will cover the cost of VAT returning to 20%, pay increases for the brand’s teams and offset inflation. Earlier this week, Bloomberg’s Pret Index reported sales in London’s financial districts are “almost back to normal” following the ending of work-from-home guidance in the UK. It previously reported this month that Pret sales in the same areas were first at 68%, and then 78%, of pre-covid levels, showing a growing momentum. Pret also this week appointed An Zhang, formerly of Starbucks, as its new group finance director, and promoted Guy Meakin from trade director to interim managing director UK & Ireland.

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