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UK’s biggest pub group Stonegate faces collapse with £2bn debt pile

Published:  11 April, 2024

The UK’s largest pub and bar operator, Stonegate Pub Company, has warned it may not continue as “a going concern” amid struggles to refinance a £2.2bn debt mountain.

The business, which has a network of 4,400 UK pubs and bars including the Slug & Lettuce and All Bar One chains, has said there is a risk that its debt cannot be refinanced by its July 2025 deadline.

According to a recent Stonegate account filing, “there is an indication that a material uncertainty exists that may cast significant doubt on the company and group’s ability to continue as a going concern”.

This means the group “may be unable to realise their assets and discharge their liabilities in the normal course of business”.

Stonegate’s owner TDR Capital, a private equity firm that owns Asda, is domiciled in the Cayman Islands. The group also partners with several other pub brands including Frontier Pubs, Six Cheers and Old Spot.

It became the UK’s largest pub group following a £1.3bn purchase of Ei Group (formerly Enterprise Inns) in 2019. The deal also included £1.7bn of debt and was completed shortly before the Coronavirus pandemic shut down much of the hospitality industry.

The GMB union had raised concerns about the group in January saying, “refinancing could lead to crippling payments to service the debt”, amid high interest rates.

In a statement, David McDowall, CEO of Stonegate Group, said: “I am really pleased with the performance of the business in 2023, which included a sector-leading Christmas trading period. We have delivered a rise in revenue and a significant increase in profitability. Our all-round performance exemplifies the strength and depth of the Stonegate estate, with our outstanding Craft Union and L&T divisions continuing to lead the way. This is testament to the hard work of our people and partners, but also to the success of our ongoing initiatives to increase profitability across our portfolio of brands and venue formats.

“Our performance gives me real confidence in the future and excitement in seeing our strategy come to fruition. Notably our asset optimisation plan which makes sure we have the right pub in the right location, further profit improvement initiatives, and above all our efforts to continue to support the Great British pub. With a summer of sport on the horizon, and the Euro’s and T20 World Cup fast approaching, we are looking forward to building on this momentum in the months ahead. We have been very clear that we continue to work towards achieving our long-term balance sheet goals, with the successful refinancing of a portion of our estate in December marking a significant strategic step towards this. We would also like to assure our valued employees and partners that venues are not at risk as a result of this process.”