Wed, 05 Aug 2020 | BUSINESS SALE
Pizza Express has announced that it is seeking a buyer for its UK business and will close 67 restaurants as it begins a major restructuring in response to the coronavirus crisis. If no buyer is found, the company’s UK and international sites will come under the control of its senior secured creditors.
The closures represent 15 per cent of Pizza Express’ UK estate and could impact up to 1,100 jobs. The restructuring deal, a company voluntary arrangement (CVA) was agreed with the group’s owner, Chinese private equity firm Hony Capital. Hony has agreed to take on the Chinese arm of Pizza Express.
The restructuring will see £144 million in fresh capital injected into the business in an attempt to provide a stronger financial foundation for the business. Half of this will be used refinance debt, while the remainder will fund the reopening of the company’s 449 UK restaurants. It has not been disclosed which 67 outlets are being considered for closure.
The company will also seek to significantly cut its considerable debt pile from £735 million to £319 million.
Pizza Express said the restructuring would “significantly strengthen the group and provide funding to deliver its future growth plan”, with Chief Financial Officer Andy Pellington describing it as a “complete solution to our balance sheet issues”.
It is thought that any buyer for the company would have to bid in excess of the £465 million owed by Pizza Express to its senior secured bondholders. It is hoped that a deal can be concluded in the autumn, after which the CVA will take place. The company has so far reopened 166 UK outlets, with a further 80 to follow later this week.
Pizza Express becomes the latest of many chains to appoint advisors, seek a sale or enter administration since the onset of the coronavirus crisis. As detailed in our recent BSR insight, the already ailing casual dining sector has been hit particularly hard by the COVID-19 lockdown.
While most of Pizza Express’ restaurants were individually profitable prior to the pandemic, the company had been weakened by financing its debt and had long been considering a major restructuring. In April 2019, the company disclosed net borrowings of £1.1 billion and interest charges amounting to £93.1 million.
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