Lenders to the GI Partners-owned pub and restaurant chain The Orchid Group have hired accountancy firm PricewaterhouseCoopers to conduct a financial restructuring on the company and to be available to step in as administrators if necessary.
HBOS, which financed the £571 million (€669 million; $846 million) buyout of Orchid by GI Partners in 2006, drafted in the restructuring team with the management’s approval, according to a report in UK newspaper The Times.
HBOS, GI Partners and PwC were unavailable to comment at press time.
Orchid: closing time?
California- and London-based private equity firm GI Partners bought Orchid, which comprises 290 pubs, from listed group Punch Taverns. Orchid is the UK’s fifth largest managed pub retailer and its portfolio includes brands such as Bar Room Bar, Q’s and Country Carvery.
Operators of pubs and bars in the UK have faced deteriorating trading conditions over the last year as poor weather, the smoking ban, government campaigns against alcohol and now diminishing consumer confidence have deterred casual drinkers.
The Beer and Pub Association, which represents around two-thirds of Britain’s pubs, recently said that pub closures had accelerated to five a day, while Regent Inns, a publicly-listed bar and pub group, described the 12 months to July 2008 as “the most challenging in the group’s history” in its 2008 annual report.
GI Partners is a repeat investor in the pub and restaurant sector. In 2005 it successfully exited UK-based wine bar chain Yates Group for £200 million, having acquired the group for £93 million the previous year. In 2006 the private equity firm acquired 21 oriental pub restaurants from Noble House Leisure and Oriental Pub Company.