Wed 24th Jul 2024 - Stonegate nears debt refinancing, TDR Capital to inject new funding Stonegate nears debt refinancing, TDR Capital to inject new funding: Stonegate Group, the UK’s largest pub company, is nearing an agreement with its creditors to address its circa £3bn debt pile. Bloomberg reported that the circa 4,500-strong Stonegate is set to receive around £200m from owner TDR Capital as part of a deal that would reduce its debt pile. An agreement could be reached as soon as this week, according to sources. The company has been in talks for months over how to tackle its capital structure amid looming maturities. Stonegate has £2.2bn of first lien bonds coming due in July 2025. Under the plan being discussed, those would be refinanced, with a longer maturity and a higher coupon. Funds holding those notes include Arini, King Street Capital Management LP and Sculptor Capital Management. Those notes are currently quoted at 99p, compared with less than 92p in late 2023, according to Bloomberg pricing. Meanwhile, £400m of second lien loans due in 2028 would be partially repaid, with holders including Canyon Partners LLC exchanging the rest for new debt. Finally, one of Stonegate’s holding companies had received a payment-in-kind facility from investors led by AlbaCore Capital LLP in 2019, and the debt has increased to more than £500m over the years, according to Bloomberg calculations. The facility would be rolled into an equity-like instrument. Earlier this year, Stonegate brought in advisers from Evercore, the investment bank, and Kirkland & Ellis, the law firm, to assess options for shoring up its balance sheet after an increase in interest rates. In December, Stonegate completed a £638m refinancing of a 1,034-strong pub portfolio, with debt provided by US private equity firm Apollo Global Management. Talking to Propel at the end of last year, Stonegate chief executive David McDowall said the business was in talks to “strengthen the balance sheet” but was under “no extreme time pressure” to find the route towards a refinancing event. In April, Stonegate reported it had returned to profitability in the first quarter of its financial year as it reiterated it continued to work towards achieving its “long-term balance sheet goals”. For the 16 weeks to 14 January 2024, the group achieved adjusted Ebitda of £117m (16 weeks 2023: £104m; 52 weeks 2023: £375m) and operating profit of £132m (16 weeks 2023: £79m; 52 weeks 2023: £68m). Pre-tax profit for the 16-week period was £23m against a pre-tax loss of £17m in the same period 12 months previously (52 weeks 2023: loss of £257m). Stonegate features in the Propel Turnover & Profits Blue Book, which is available exclusively to Premium Club members and features 947 companies. Stonegate’s turnover of £1,719,000,000 for the 52 weeks ended 24 September 2023 is the eighth highest in the database. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email kai.kirkman@propelinfo.com to upgrade your subscription.