‘PizzaExpress creditors in talks with owners to take a slice’

Recent media reports have suggested a group of bondholders of PizzaExpress are in talks to provide new funding in a deal that could see them taking over a large portion of the restaurant chain.

The Financial Times was the first to comment on the discussions noting Chinese owner Hony Capital may lose control of the company as part of a debt-for-equity swap.

Creditors, including Cyrus Capital Partners, HIG Capital and Bain Capital Credit, are said to be investing GBP 465.00 million-worth of bonds in exchange for PizzaExpress’ core UK and Irish business, according to sources.

Hony, as reported by Bloomberg, may keep control of the Chinese arm; however, terms have not yet been finalised and there is no guarantee of a deal being reached.

PizzaExpress has been struggling with loss of revenues amid the coronavirus pandemic and may be looking to close down restaurants in a bid to stay afloat.

The company was founded in 1965 and operates over 490 sites in the UK and Ireland, as well as having a further 100 locations across 14 countries.

Hony acquired PizzaExpress for GBP 900.00 million in 2014.

The company’s profits came under pressure last year, following which the group hired advisors to prepare for talks with creditors over its debt, which stands at roughly GBP 1.10 billion, Bloomberg reported.

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In the firm’s last annual report, PizzaExpress posted revenue of GBP 543.00 million in the year ended 30th December 2018, up 1.6 per cent from GBP 534.20 million in the previous 12 months.

Earnings before interest, taxes, depreciation and amortisation declined 15.3 per cent to GBP 80.20 million in 2018 (2017: GBP 94.60 million).

According to Zephyr, the M&A database published by Bureau van Dijk, there have been 308 deals targeting restaurants and other eating places announced worldwide in 2020 to date.

In the largest of these, Lone Pine Capital disposes entire 14.5 per cent stake in Luckin Coffee for USD 1.27 billion.

Other targets included Fast Food Holdings, Darden Restaurants and the Habit Restaurants.

© Zephus Ltd

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