The Restaurant Group looks to raise £175m to grow its Wagamama and pub brands as reopening beckons

By BigHospitality

- Last updated on GMT

The Restaurant Group looks to raise £175m to grow its Wagamama and pub brands as reopening beckons

Related tags: The restaurant group, Coronavirus, Wagamama, Casual dining, R200, Multi-site

The Restaurant Group (TRG) is looking to raise £175m as part of its ‘Restructured, Recapitalised and Ready for Relaunch’ plans.

The funds, which will be raised by way of a firm placing, and placing and open offer, will help protect the restaurant group against any potential resurgence of the Covid-19 pandemic as well as strengthen its ability to expand its Wagamama restaurant brand and its pubs businesses, says TRG.

The capital raise will take place by way of a firm placing of 95,299,430 new ordinary shares; and a placing and open offer of 79,700,570 new ordinary shares. It will be set at an offer price of 100 pence per share.

Commenting on the move, Paul Ruddy, leisure analyst at investment bank Goodbody, said it would place the group in a strong position to benefit from the wider recovery of the sector by providing flexibility to invest and grow the business.

“Looking forward, we are highly confident that the Pubs and Wagamama businesses, which account for 58% of the estate, will recover strongly when restrictions are lifted," he said. "More widely, the legacy leisure business will benefit from better rental terms, lower UK restaurant supply, and the increased contribution from delivery.”

The announcement comes as TRG’s full year results show total revenues were down 57% to £459.8m, for the 52 weeks ended 27 December 2020.

Adjusted EBITDA was £8.7m, compared with £136.7m in 2019, while adjusted operating profit fell to a loss of £30.5m (2019: profit of £91.1m).

In its trading update for 2020, the group said it had seen an encouraging performance in all periods, when its businesses were permitted to trade, with Wagamama and its pubs business particularly strong.

"The Covid-19 pandemic has presented enormous challenges for our sector but the TRG team has responded decisively to re-structure our business whilst preserving the maximum number of long-term roles for our colleagues,” says chief executive officer Andy Hornby.

“TRG is operationally a much stronger business than 12 months ago. The capital raise, alongside the debt re-financing announced last week, represents the last important step in our re-structuring process and provides TRG with the long term flexibility to invest in growing our business. 

“Whilst the sector outlook remains uncertain, and we are mindful of continuing restrictions across the UK, we are confident that the actions announced today will allow us to emerge as one of the long-term winners."

At the beginning of March, TRG announced that it had signed commitments in relation to £500m of new debt facilities, which comprise a £380m term loan facility and a £120m super senior revolving credit facility.

The new facilities provide the group with enhanced liquidity and refinancing. They will, as required, be used to pay and refinance in full all of TRG’s existing debt facilities, which are due to reach maturity by July 2022.

Over the past year the group has restructured the business, exiting sites that were deemed structurally unattractive and undertook a CVA. The business now operates around 400 sites – down approximately 250 from the end of 2019.

At the end of the financial year the group operated approximately 400 restaurants and pubs, compared with 653 at the end of 2019.

Related topics: Business & Legislation, Casual Dining

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