LONDON (Reuters) – The Orchid Group, the pub and restaurant business owned by transatlantic private equity house GI Partners, said on Monday it has completed a financial overhaul to help it weather the difficult trading climate.
The deal is in the form of a ‘pre-pack’ — a restructuring move under which the group is placed in administration and immediately bought back by the original owners.
Orchid’s bankers HBOS (HBOS.L) and Deutsche Bank (DBKGn.DE) will take a minority stake in the business in return for relaxing covenants, providing Orchid with the firepower to pursue distressed opportunities in the sector.
Orchid said the vast majority of the equity in the managed pubs group, which operates the Bar Room Bar and Country Carvery chains, will remain in the hands of the original shareholders.
The restructing arrangements will see the pub and restaurant estate reduced to about 260 from 287 sites and secure the jobs of the majority of the the group’s 6,500 staff.
Administrator PricewaterhouseCoopers said it is working with Orchid to secure the survival of the remaining pubs.
GI Partners managing director Phil Kaziewicz said: “Orchid is now very well placed for the future and we look forward to continuing to support the business as it grows further and in particular embarks on its acquisition strategy.”
A source close to the firm said it has further capital to fund other acquisitions and wants to be seen as a consolidator in the sector.
GI Partners is in the process of raising its third fund with a target of approximately $2.5 billion.
Orchid was formed in 2006 when GI Partners acquired a package of almost 300 pubs from Punch Taverns (PUB.L) Plc for 571 million pounds, some 500 million which was debt.
(Reporting by Simon Meads: editing by David Cowell)