Questions have been raised about the acquisition by Ron Burkle, the US billionaire investor, of a 60% stake in Soho House, the private members’ club business, owned by Richard Caring and Nick Jones, with a report suggesting that his involvement was part of a restructuring deal to refinance the highly geared company. According to the Financial Times, the holding company for the Soho House network of companies was “groaning under” net debt of £181m before Buckle made his investment in the business last month. The deal saw Burkle acquire a 50% stake in the company from Caring and a further 10% from Jones. Caring is left with a 30% holding in the business, which was founded in London in 1995, while Jones, who remains chief executive of the group, retains a 10% stake. The deal was said to value the group at around £250m. However, the newspaper said it was not clear how the £105m Caring paid to take an 80% stake in the group in 2008 could have turned into a business worth £250m four years later, assuming the ascribed value was accurate. It said that the group reported a consolidated turnover of £85.6m for the 40 weeks to January 2 last year, and earnings before interest, taxation, depreciation and amortisation (ebitda) of £11.9m, excluding exceptional items, making the ascribed £250m valuation look expensive at 21 times earnings. Accounts filed in January 2011 for Soho House’s holding company, SHG Acquisition UK, show that the company’s balance sheet was stretched, with shareholders’ funds in deficit by £18m. Although the company accorded £54m of goodwill to the value of its Soho House trademark, it was nevertheless weighed down with £185m of gross debts, the majority provided by lender Halifax Bank of Scotland, which was subsequently taken over by Lloyds, and the accounts refer to two separate refinancings due in December 2011 and January 2013. Notes in the accounts regarding the refinancing state: “Current economic conditions create uncertainty in particular over the availability of bank finance in the foreseeable future?.?.?.?However, [Mr Caring] the ultimate controlling party has informed the group that he has undertaken to provide such financial support as the company requires should no refinancing options become available.” Neither Soho House nor Yucaipa would comment on the financial terms of the deal, although a spokesman for Los Angeles-based Yucaipa said the £250m figure reported in the press was inaccurate. However, documents filed in Companies House on the day that Mr Burkle’s investment was announced reveal that its lender had agreed to a major refinancing of the company’s debts just days before.