Intertain, the operator of the Walkabout brand, is to undergo a restructuring, which will include a Company Voluntary Arrangement (CVA), and has aleady seen a reduction in its debt levels, as part of plans to secure the long term future of the business, M&C Report has learnt.
The 32-strong group, which was acquired by the Jon Moulton-led Better Capital last November, is understood to have got agreement for a financial restructuring that will strengthen its balance sheet and reduce its debt burden from £30m to £14m, conditional on the approval of the CVA.
It is thought that Better Capital will also commit £6m of new money to fund the company’s capital investment programme, conditional on the approval of the CVA. It currently operates 26 sites under the Walkabout brand and six unbranded bars.
The proposed CVA will revise lease terms and “refocus the business on a smaller, more profitable core estate”. It is thought that seven sites will close in mid-March, assuming the CVA is approved.
The company has appointed advisor Zolfo Cooper to oversee the process.
Chief executive John Leslie said: “Walkabout is a strong brand with a loyal customer base and most of our sites are performing well, generating a good level of return. However, a few sites are loss making or have onerous leases, so to continue running them as they are is not viable.
“Although we will have to exit a number of sites, our hope is that some of those that are currently not generating an acceptable return will become viable if their rent is reduced to current market levels. The most effective way to make this happen is through a CVA, which will be the least disruptive to the business and will provide the best return to landlords.
“The plan we have announced today is crucial for reducing our level of debt, providing the right operational structure for the business and securing a strong and sustainable future for Intertain. We hope that creditors will accept our proposals which will provide us with the necessary financial strength to be able to access new market opportunities and resume our investment programme to the benefit of all of our stakeholders.”
Detailed CVA proposal documents have been made available to creditors of Intertain Bars Limited today, with a vote on the proposals due on the 6 February 2015.
In November, Better Capital agreed to acquire the company’s debt, thought to be c£13m, plus equity from its main creditors. Since May 2013, the group’s equity and debt had been held equally by Barclays Ventures, and a consortium owned by investment group TPG Opportunities Partners and Goldman Sachs. They replaced the previous owners, the banks West LB, RBS, Lloyds and Barclays.
Intertain was formed in October 2009 to acquire the prime trading assets previously owned and operated by Regent Inns.
Five years on, the group said it was able to report excellent returns from its investment in the Walkabout brand and programme of refurbishments. The most recent Walkabouts to benefit - in Derby, Carlisle and Lincoln - have seen trade increase by an average of 52%. Last year, it signed a deal to introduce Jongleurs into five venues that currently operate the bar group’s Highlight brand - in Camden, Watford, Reading, Leeds and Birmingham.
Leslie told M&C Report last year, that Walkabout had the potential to grow to 50 sites in the UK.
In 2011, Intertain revealed that it had reached an agreement on a £29.9m debt for equity swap, with its banking group renewing a £5m working capital facility. The restructure saw the company’s debt reduced from £65m to £35m.
