Lloyds looking for equity investor in Admiral Taverns
Lloyds Bank has been looking for a new equity investor to take a stake in Admiral Taverns, the tenanted operator owned by the Landesberg and Rosenberg families.
The bank faces losses of between £400m and £450m in respect of its outstanding loans of around £850m.
Admiral raised around £100m last year through pub sales — it is thought pubs were selling for around £330,000. Sources indicate that pub sale values have dived this year to below £200,000.
The company is divided into three divisions; core, turnaround and disposal. The turnaround division, which is run by Peter Brook, is thought to have seen barellage halve over three years from around 150 barrels to 75 barrels, although that figure is thought to include closed pubs.
It is also understood that Admiral is currently spending £5m a year on the cost of closed pubs. Accountants PricewaterhouseCoopers have been working on behalf of Lloyds Bank, which inherited the Admiral loans in the wake of its takeover of HBOS, is seeking a new equity investor in the business.
One source said: "There is a decent core business of at least 1,000 pubs. The turnaround division is being touted as an investment opportunity but needs a lot of capital expenditure.
"One problem is that beer volumes have been freefall and the alternative use market seems to be a lot weaker this year than last year."
Admiral Taverns has bought more than 3,000 pubs from major operators like Punch, Enterprise and Greene King since it was founded in 2004. The buying spree culminated in the acquisition of 869 pubs from Punch Taverns in 2007.
Last year, the company declared it wasn't buying pubs for the time being and would focus on paying down debt. Admiral raised around £106m last year and was targeting around £60m this year.
The company's business model relied on its ability to sell its bottom-end pubs for around book value because of the strength of the alternative use market. Its pubs are referred to as "hybrid" because pub valuations are directly linked to pubco earnings — meaning they have been bought at a value that provided the safety net of the alternative use market.
