PizzaExpress’s Owner Starts Tackling Debt With Bond Buyback
PizzaExpress’s Owner Starts Tackling Debt Pile With Bond Buyback
(Bloomberg) -- PizzaExpress‘s owner took a first step toward tackling the company’s debt pile, offering to buy back bonds that are due to mature in 2022.
Private equity firm Hony Capital will purchase as much as 80 million pounds ($103 million) of the company’s 200 million pounds of unsecured notes due August 2022, according to a statement sent to investors and confirmed by the company’s spokesman. PizzaExpress also said it hired advisers Houlihan Lokey Inc. and Kirkland & Ellis as it seeks to extend or refinance a 20 million-pound credit facility maturing in August.
The bonds rose 10 pence on the pound to 24 pence on Wednesday, according to data compiled by Bloomberg.
A national icon for many Britons, PizzaExpress has been caught up in a broader malaise of rising costs and changing consumer habits forcing many retailers and leisure companies to close sites and seek protection from creditors. High profile casualties include the dining chain owned by celebrity chef Jamie Oliver, which filed for insolvency in May.
PizzaExpress’s unsecured creditors -- which include Beach Point Capital Management -- will have one month to review Hony’s offer to buy back the bonds at discount. A group of them is being represented by law firm Paul Hastings, according to people familiar with the matter. A representative for the firm declined to comment on the role.
If successful, the buyback could facilitate negotiations for the refinancing of the credit facility and other secured debt, reducing the risk of a debt-for-equity swap, the people said. The company has 465 million pounds of secured bonds maturing in 2021, which rose 5 pence to 91 pence on Wednesday, Bloomberg data show.
PizzaExpress has been struggling with its core U.K. market at a time when it was expanding in China following its acquisition by Hony in 2014.
The company’s earnings declined almost 9% to 19.6 million pounds between July and September compared to the same period a year earlier. Profits were impacted by weak consumer confidence in the U.K. and Hong Kong protests, according to the statement.
PizzaExpress operates 477 wholly-owned restaurants in the U.K. and Ireland, 95% of which are profitable, and it doesn’t plan any closures, the company said in the statement.
--With assistance from Katie Linsell and Laura Benitez.
To contact the reporters on this story: Antonio Vanuzzo in London at avanuzzo@bloomberg.net;Luca Casiraghi in London at lcasiraghi@bloomberg.net
To contact the editor responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net
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