Orchid Group's backer slams whispering campaign

The backer of the Orchid pub group has slammed a 'whispering campaign' which has suggested the business is in financial trouble.

Having acquired the pubs that made up Orchid from Punch Taverns for £571m three years ago, US investment firm GI Partners (GIP) ploughed a further £50m into an estate refurbishment and repositioning programme.

However, industry gossip suggests the financial strain of paying a high price for the pubs plus the subsequent capital expenditure was beginning to tell.

Phil Kaziewicz, managing director of the UK arm of GI Partners, said he was "well aware" of the rumours surrounding the group, but denied it had money problems.

"Orchid doesn't have any financial woes. We're ahead of where we were when we started. Yes, the economy has affected us, but only insofar as slowing our growth," he said.

Kaziewicz added that the group was being watched by local competitors "very closely, and by some with a considerable degree of envy".

While he wouldn't reveal trading figures, Kaziewicz said individual Orchid pub EBITDAs were now higher than they had been when GIP bought the estate.

"Not hugely, but we're up when some of the competition has seen like-for-like declines of between 15 and 40 per cent. In this market that's an exceptional achievement," he said.

GIP was getting unlevered returns on its core invested estate of between 20 and 30 per cent, Kaziewicz added.

As well as rejecting talk of problems at Orchid, Kaziewicz sent a stark warning to the group's detractors.

"Let me be quite clear, if a competitor passes an attributable and untrue comment that could damage Orchid's relationship with its suppliers or staff, there is no question that we will take the matter further," he said.

Kaziewicz said the £571m GIP spent buying Orchid included £11m of working capital.

"The estate, valued at the time at £550m, was in decline and sales waned until about August last year, since when the effect of the investment we've put into our pubs has resulted in both sales and profits going up consistently month after month," he added.

When GIP eventually sells Orchid Kaziewicz said people would "judge our performance in terms of our exit. Until then we are looking to expand the business".