Stonegate Pubs Refinancing Options: An Analysis of Asset Sale, Priming Debt, Drop-Down Capacity

Relevant Documents: Stonegate Q3 ‘23 Report Stonegate Q3 ‘23 Results Presentation Stonegate 2025 Notes OM Unique Securitization OM Stonegate Pubs has had its ups and downs lately. Just as it was recovering from the effects of the Covid crisis, it was hit by a rainy summer in 2023 punctuated by train strikes and high energy costs – not a good thing for the hospitality industry. The group recently announced its results, with revenue in the 40-week period ended July 2 up 7.9% from the same period a year earlier. Adjusted EBITDA fell 6.4% year over year over the same period. Net debt (including lease liabilities) was stable at £3.8 billion at the end of the period. With LTM EBITDA of £458 million, that gives it a rather hefty net leverage of 8.3x. In response, Stonegate has been shoring up its liquidity options, agreeing an additional £50 million RCF A facility and extending its RCF B facility to September 2024. It has also been selling assets – in the 40 week period to July 2, it disposed of 47 trading sites, seven non-trading sites and seven non-licensed properties for net proceeds of £39 million. Despite these efforts, Moody’s recently downgraded its[...]