Stonegate Group warns on future as it battles £2.2bn debt pile

Britain’s biggest pub operator Stonegate has raised concerns about its future as it battles a £2.2bn debt pile. 

The operator of over 4,000 pubs –  including the Slug and Lettuce and All Bar One chains – said there is a risk its debt cannot be refinanced by its July 2025 deadline. 

“There is an indication that a material uncertainty exists that may cast significant doubt on the company and group’s ability to continue as a going concern for the going concern assessment period,” Stonegate said in a recent account filing. 

It added the hospitality chain “may be unable to realise their assets and discharge their liabilities in the normal course of business”. 

The Stonegate Pub Company is domiciled in the Cayman Islands and owned by private equity group TDR Capital, which also owns Asda. 

The GMB union flagged debt concerns back in January, warning it could place 19,000 jobs at risk. 

David McDowall, chief executive of Stonegate, said: “I am really pleased with the performance of the business in 2023, which included a sector-leading Christmas trading period. We have delivered a rise in revenue and a significant increase in profitability.

“Our all-round performance exemplifies the strength and depth of the Stonegate estate, with our outstanding Craft Union and L&T divisions continuing to lead the way. This is testament to the hard work of our people and partners, but also to the success of our on-going initiatives to increase profitability across our portfolio of brands and venue formats. 

He added: “Our performance gives me real confidence in the future and excitement in seeing our strategy come to fruition. Notably our asset optimisation plan which makes sure we have the right pub in the right location, further profit improvement initiatives, and above all our efforts to continue to support the Great British pub.

“With a summer of sport on the horizon, and the Euro’s and T20 World Cup fast approaching, we are looking forward to building on this momentum in the months ahead.

“We have been very clear that we continue to work towards achieving our long-term balance sheet goals, with the successful refinancing of a portion of our estate in December marking a significant strategic step towards this.”

Commenting at the time, they said: “Stonegate is one of the largest pub companies in the UK, with more than 4,500 pubs and more than 19,000 workers, including brands like Slug and Lettuce, Yates and Walkabout.

“Huge interest payments on TDR Capital’s debts have already resulted in cost pressures at Asda, resulting in cuts in hours for staff, cutting corners on health and safety and a rise in a toxic culture of bullying and harassment.”

The business has been trying to tackle its debt pile for months after Bloomberg reported that it had appointed bankers at Evercore and lawyers at Kirkland & Ellis to look at options. 

It comes amid a period of extreme pressure for pub and restaurant groups as they battle a slowdown in consumer spending and rising bills. 

Revolution Bars has already closed eight underperforming sites this year with more expected to follow as it scrambles for cash. 

The UK’s largest nightclub operator Rekom also slashed 471 jobs  and 17 sites as a pre-pack deal was agreed earlier this year.