Stonegate Group has completed a refinancing of a portfolio of 1,034 pubs, which is structured as a sale to unrestricted subsidiaries of the group.
The portfolio comprises 944 leased and tenanted and 90 free-of-tie freehold pubs outside the securitisation group, delivering £77m of EBITDA for the 52-weeks ended September 24, 2023.
The portfolio is predominantly weighted towards the South of England and generates the majority of its revenue from drink sales, with a mid-market focus and a strong bias towards well-populated, suburban locations.
It will be acquired by newly incorporated, wholly-owned unrestricted subsidiaries of Stonegate, called New PubCos.
As part of the transaction, Stonegate will enter into agreements with New PubCos on an arm’s length basis to provide the portfolio with certain management and procurement services.
In consideration for the transaction, Stonegate and/or its restricted subsidiaries will receive upon completion (i) £609m cash proceeds, funded via a secured whole-business loan newly advanced by third party financing providers to New PubCos and (ii) a £201m promissory note issued to Stonegate.
The transaction follows a competitive process undertaken by Stonegate, in which the group solicited equity and financing proposals.
The group will continue to benefit from the portfolio’s contribution to the Stonegate’s scale, retain strategic oversight and optionality for a future sale, and preserve any value upside from the portfolio within the group.
David McDowall, CEO of Stonegate, said: “This transaction marks an important step in achieving the Group’s long-term balance sheet goals and is the result of a competitive process that saw significant interest. We are pleased with the result of this attractive financing arrangement, and our ability to preserve the option of retaining the portfolio within the group.”
