The business, which acquired Ei Group for c.£1.3bn just before the pandemic hit – making it the largest pub company in the UK – is now ready to scale back its c.4,500 portfolio of sites.
The TDR Capital owned group is looking to raise an estimated £800m from the sale of the pubs, with real estate investment bank Eastdil Secured appointed to advise on the planned sale, which is likely to be kicked off in the spring, sources told the newswire.
In addition to the impact of the pandemic, the business, like others, has been struggling with increased energy costs and dampened consumer confidence.
“The biggest concern is energy,” Ian Payne, Stonegate’s chairman, said in an interview. “We know what we’re going to pay in February and March, but we still don’t know what we’re going to pay beyond that.”
In March 2021 it sold 42 pubs to RedCat as a condition of its takeover of Ei. The same month Stonegate reported that it had made a loss before tax of £746m in the full year to 27 September 2020, following the purchase of Ei Group, and as a result of the pandemic.
The group said its structure has “changed dramatically, with both a significant increase in size of debt but also in complexity” and is financed by external debt totalling £2.97bn.
During the reporting period the group received a cash injection from owner TDR Capital of £50m and raised a further £120m in debt markets.
Speaking about the timing of the completion of the deal for Ei at MCA’s Pub Conference last summer, Payne said that in the space of 17 days, the group’s sense of elation turned to sheer horror as the grim reality of Covid-19 began to sink in. “I’m sitting there with a £1.5bn debt…and no business. [It’s] something I never want to go through again in my life,” he recalled.
Last July, Stonegate placed around 75 freehold pubs on the market, with a valuation of up to £100m.