BILLIONAIRE property magnate Robert Tchenguiz is looking into the prospect of putting part of his Laurel Pub Company into administration to facilitate a refinancing of the rest of the company`s debts.
Having already suffered heavy losses form his investment in Mitchells & Butlers, the move towards administration is a fresh blow to Mr Tchenguiz`s ambitions in the pub sector.
According to The Times, Mr Tchenguiz is considering putting between 50 and 100 of Laurel`s 460 outlets into the hands of administrators.
Laurel will safeguard the rest of its business by entering into a `pre-packaged` administration agreement, and the deal would allow the company the opportunity it to bring long-running talks over a refinancing of its estimated £165 million debt burden to an end.
The establishments in question are all loss-making leasehold pubs and bars in high street locations that have suffered a sharp fall-off in trading since November because of the impact of the smoking ban and the consumer spending downturn.
An industry source told The Times: “Although some of these units make money before rent, they have onerous leases. Many have been loss-making for some time and a small number have been closed for a year.”
Laurel is still hoping to avoid administration by selling off the under-performing outlets, either as a group or in smaller packages, but any sale would be made all the more difficult due to the sheer number of such properties currently on the market.
Mr Tchenguiz has until the end of March to negotiate a refinancing of Laurel`s debt burden with the company`s bankers Kaupthing and Dresdner Kleinwort.
Although the banks are said to be supportive, the discussions, which started several months ago, have been complicated by the credit crunch and the decline in trading in drink-led pubs and bars.
One source said: “Trading was fine, then in November it was as though someone had turned out all the lights.”
Mr Tchenguiz`s investment vehicle R20 bought Laurel for £151million in November 2004, then followed up in May 2005 with the purchase of Yates Group for £202 million.
A month later he added 98 SFI Group pubs for an estimated £80 million and in April last year he spent £123 million on tapas bar chain La Tasca.
The expanded business has been split into two categories- casual dining and pubs and bars - each with about 230 outlets.
The loss-making sites being targeted for possible administration are all from the pubs and bars division, whose biggest brand is Yates`s, with about 112 outlets. It also owns the Hog`s Head and Litten Tree chains.
While the news may be troubling for the pub industry, the restaurant sector will be buoyed by the fact the company`s casual dining division is continuing to deliver strong trading figures.
The division is made up of about 90 Slug and Lettuce outlets, 80 La Tasca eateries and 26 HA! HA! Bar & Canteen units. It has a further 30 or so sites awaiting conversion to one of these concepts.