Vulture funds are circling a portfolio of 1,000 British pubs as the country’s biggest operator grapples with the fallout from soaring interest rates on a multibillion-pound debt pile, writes Oliver Gill.
Cerberus and Morgan Stanley Real Estate are among a clutch of distressed-debt investors to have submitted bids for almost a quarter of the pub estate owned by Stonegate, say City sources.
Stonegate is looking to spin off unencumbered pubs into a new special-purpose vehicle (SPV) and raise new debt to help pay down nearly £4 billion of borrowings — half of which is due to be repaid or refinanced by July 2025. Any refinancing is likely to be at a higher rate of interest, placing pressure on the company’s finances.
Fortress Investments, the owner of Punch Taverns, and hedge funds Oaktree Capital Management, Sculptor Capital Management and Avenue Capital are understood to have run a rule over the pub portfolio.
Bids to provide debt financing to the SPV were submitted a fortnight ago. Sources said that Stonegate’s advisers, Barclays and Eastdil, are looking to take one of the parties forward into exclusivity in the coming days. Stonegate is thought to be seeking to raise about £600 million. However, the debt could yet be shelved if bids are not deemed attractive, sources added. All parties declined to comment.
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