Premium Bars & Restaurant (PBR), the troubled operator of Living Room, has been put up for sale by its banks, in an attempt to recoup its £45m debts.
Its lead bank partner, Royal Bank of Scotland, has agreed to fund it for the next 12 weeks and asked BDO Stoy Hayward to seek out potential buyers.
An administration appears to remain the most likely outcome given that the group has debts of about £45m and is only likely to attract offers of up to £30m in the current market.
It is thought that the bank is considering taking full control of the company.
A source close to the situation said: “The banks are in to this for more than the value of the company so it is difficult to envisage an immediate resolution. It may however be an interesting situation for a private equity group to work with the banks.”
It is thought that given the company can service its debts – it currently produces company ebitda of about £5m against annual interest charges of between £3m and £3.5m – the banks may be inclined to take control of the business and wait for asset values and multiples to recover.
It is understood that Gavin Gracie, appointed three months ago as chief restructuring officer, could lead the company through the process.
Alternative options include the Reuben brothers – PBR’s largest shareholders – putting more money into the business in exchange for a larger shareholding.
Other interested parties include: Tim Bacon, the founder of Living Room; 3D Entertainment, the nightclub business; and Mark Jones, the former chief executive.
Bacon is believed to be interested in acquiring the Living Room brand, while 3D recently held abortive merger talks with PBR. Jones is understood to have been approached by a private equity house interested in supporting a management buy-in.
In a statement to the stock market – released after the market closed on Friday evening – the company confirmed its banks had provided short-term funding.
The statement said: “This funding is available for a period of 12 weeks on the condition that the company embarks on a process whereby it will be marketed with the intention of a sale of some, or all, of the company’s assets taking place at the end of the process.”
The statement said that advisers had been appointed to determine “the best option, or combination of options, to maximise value at the PBR group of companies going forward”.
It is thought that BDO is preparing to circulate an information memorandum to interested parties.
