Stonegate Pub Company is currently mulling over the possibility of divesting a quarter of its UK pubs, a move driven by the need to alleviate its debt in the face of escalating interest rates, as reported by The Times.
Insiders familiar with the situation informed the publication that the UK-based pub chain is assessing offers for 1,000 pubs, with bids coming from Cerberus and Morgan Stanley Real Estate.
Rising interest rates led to a surge in the company’s refinancing expenses. This action by the proprietor of Slug and Lettuce as well as Be At One brands forms a key aspect of its plan to alleviate its £4 billion ($4.9 billion) debt, with half of it set to mature in July 2025.
The report also mentioned that Stonegate’s advisors for this sale, namely Barclays and Eastdil, might contemplate one of the offers from the interested parties and move closer towards exclusivity in the days ahead.
According to reports, Stonegate is purportedly considering the division of the group, comprising approximately 1,000 outlets, into a special-purpose vehicle (SPV) with the intention of leveraging it to secure external debt financing.
The proposal could also be set aside should the company fail to garner appealing offers from potential buyers.
In February this year, it was reported that Stonegate was in the process of seeking buyers for a collection of 1,000 of its pubs, with an asking price of £800 million.
According to the Bloomberg report, Stonegate aims to downsize its portfolio as a response to increasing energy costs, staffing challenges, elevated inflation rates, and the shifting consumer preference for home-based drinking.
Before the onset of the Covid-19 pandemic, Stonegate completed the acquisition of its rival, Ei Group, for £1.3 billion, solidifying its position as the largest pub group in the UK.