Caffè Nero completes £330m debt refinancing as it looks to grow

14-Jan-2022 - Last updated on 14-Jan-2022 at 11:47 GMT

Caffè Nero has completed a £330m debt refinancing with a syndicate of three banks, effectively fending off the takeover ambitions of the Issa brothers.

After this week’s refinancing, Nero has a six-year loan package provided by HSBC, Santander and Carlyle Group, as well as an undrawn facility of £85m to fund its expansion. Its equity remains majority-controlled by founder and group CEO Gerry Ford, together with family and friends.

With the new loan arrangement, Caffè Nero says it has reduced its debt exposure by around 15% while securing additional facilities for significant growth.

“This is a great platform for us to grow our business, including: opening up new stores, investing in digital channels, developing our coffee at home program and building our brand in international territories,” says Ford.

In late 2020, Mohsin and Zuber Issa of EG Group acquired £160m of Nero Holdings’ mezzanine debt from Partners Group, and tried to wrest control of the coffee shop chain from Ford.

The petrol forecourt tycoons used their debt position to launch a legal challenge to the chain’s company voluntary arrangement, but in September a High Court judge dismissed their case, rejecting their allegations of “material irregularity and unfair prejudice”.

Caffè Nero currently operates four brands - Caffe Nero, Coffee #1, Harris + Hole and Aroma – across 1,020 stores in 10 countries. It reports that sales in the first-half of its financial year (June-November 2021) were up 61% with EBITDA for the same period recorded at £29.4m. Like-for-like sales at the end of November 2021 were tracking at 90% ofFY19 levels.

“It’s great to have our family business returning to its successful pre-Covid levels,” adds Ford.

“We were a strong business before Covid-19, and now having weathered the pandemic, survived a hostile takeover attempt, won the court case against the EG Group and paid back our emergency banking loans over the last 21 months, we have shown incredible resilience and I believe we will come out of these challenging times even stronger than we were before.”

“I now look forward to taking the Caffè Nero brand to new heights as we forge ahead with our new partners.”