Stonegate Pub Company is considering divesting a quarter of its pubs in the UK to reduce its debt as interest rates continue to escalate, the Times has reported.
Sources familiar with the development told the publication that the UK-based pub chain is evaluating bids for 1,000 pubs from Cerberus and Morgan Stanley Real Estate.
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Escalating interest rates increased the company’s refinancing costs. This move by the owner of the Slug and Lettuce and Be At One brands is part of its strategy to ease its £4bn ($4.9bn) debt, of which half will be maturing in July 2025.
The report added that Stonegate’s advisers for this sale, Barclays and Eastdil, could consider one of the bids from the parties and take forward into exclusivity in the coming days.
Stonegate reportedly plans to split the group of about 1,000 outlets into a special-purpose vehicle (SPV) and use it to raise debt from outside parties.
The proposal may also be shelved if the company does not receive attractive bids from the buyers.
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By GlobalDataIn February this year, reports emerged that Stonegate was seeking buyers for 1,000 of its pubs for £800m.
The Bloomberg report said that Stonegate intends to scale back its portfolio due to rising energy bills, labour shortages, high inflation rates and the preference of some customers to drink at home.
Prior to the Covid-19 pandemic, Stonegate acquired rival Ei Group for £1.3bn and became the UK’s biggest pub group.
