Pizza Express is set to be taken over by its bondholders after a sale process seeking potential buyers failed to drum up a competitive offer.
The deal would involve Hony Capital, the private equity firm based in Beijing, handing over the keys to the restaurant chain via a debt-for-equity swap, although Hony is expected to retain control of Pizza Express’s operations in mainland China.
Under the agreement with its secured noteholders and Hony, the group would be restructured and its external debt reduced from £735 million to £319 million. It would receive £144 million of new facilities to support development of the business.
As part of the restructuring, the British division of Pizza Express would be put through a company voluntary arrangement to enable the group to close 73 uneconomic outlets, with the loss of up to 1,100 jobs.
More than 89 per cent of creditors voted to support the CVA, which includes a cut in outstanding rent arrears, reduced rental agreements and a temporary move from quarterly to monthly rents.
In parallel with the debt restructuring, the company hired Lazard, the financial advisory group, to seek offers putting a higher value on the business than that implied by the debt-for-equity swap. Barring a last-minute change, no such offer had been received, paving the way for the bondholders to take control. A vote of all bondholders to approve the debt-for-equity swap is due to take place next month.
Pizza Express, which was founded in Soho, central London, in 1965 by the late Peter Boizot, was acquired by Hony in 2014 in an £873 million deal. The restaurant chain has 627 outlets, including almost 150 outlets overseas, many of them franchises. In the UK it has more than 450 restaurants, all of which were forced to close temporarily during the lockdown.
The CVA, which does not affect its Irish or international operations, will involve the permanent closure of sites including Aberdeen, Bristol, Nottingham and Newcastle, as well the original site on Wardour Street in Soho. The CVA secures 9,000 jobs.
Source: The Times
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