Admiral Taverns lender set to write down £500m

Lloyds Bank faces the prospect of writing down hundreds of millions of pounds of its investment in Admiral Taverns.

According to accounts filed with Companies House the privately-owned pub operator, which breached its banking covenants at the end of last year, said it was in discussions with its lenders which could lead to a debt-for-equity swap.

In the report Admiral said: "Discussions have taken place between the interested parties regarding the preferred options of a debt-for-equity swap by the principal banker or the introduction of significant additional new equity by new equity investors."

Financial restructuring talks between Admiral and its banks have been on-going since the end of October last year, the pubco said, "to enable the group or trading operations within the group to continue to operate".

As at June 1 this year Admiral's loans stood at £855m from Bank of Scotland and £106m from Irish Nationwide Building Society.

According to a report in the Financial Times​ Lloyds, which bought Bank of Scotland last year, is looking at writing down a figure of £500m on its investment in the business.

Admiral built up its pub estate by buying up bottom-end sites from the likes of Punch Taverns and Enterprise Inns a few years ago.

It soon became the third largest tenanted and leased pub operator in the UK, but its sites have been badly hit by the smoking ban and economic recession.

Earlier this year Admiral created what it termed its 'Phoenix Division', headed by former Tattershall Castle Group boss Peter Brook, in order to cater for its struggling sites.

Around 730 pubs - almost one in three of the group's estate - were moved into the division.