Pubs 'n' Bars breaches banking covenants
The 106-strong Pubs ‘N’ Bars group has breached its banking covenants after writing down the value of its freeholds by £5.28m and its leaseholds by £1.09m.
The company saw total revenues grow by 11% to £22.3m for the year to 31 December 2008 although like-for- likes were down 5%. The company posted a pre-tax loss of £8.94m after exceptional items.
A statement said: “The fall in property values has also lead to the group breaching its banking covenants. The directors are currently in discussions with the group’s bankers with regard to restructuring its bank facilities and believe that this will include increased interest rate charges. As a result steps have been undertaken to reduce the group’s overheads.”
Pubs ‘N’ Bars, which has 64 managed pubs and 42 tenanted sites, has been offering its tenants the opportunity to purchase the freeholds of their pubs. Negotiations are in hand but so far no sales have been concluded, the company said.
The company insisted, however, that the 2008 fall in asset values detracts from the company’s true trading position - underlying Ebitda fell 22% to £2.38m. Current like-for-like sales are around 3% below last year.
The company’s net interest charges increased 43% to £2.54m during the year - its principal bankers decided in April 2008 to charge 2% above Libor rather than 1.5% above base which added around £150,000 to net interest charges.
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