Honeycombe Leisure signs deal with pubco to manage estate
Honeycombe Leisure, the north west-based operator, has gone into partnership with a new £11m managed house business called Nectar Taverns. Honeycombe will manage Nectar's estate.
Nectar has been established as a VCT (Venture Capital Trust) vehicle. The business will raise £4m through a private placing and has secured £7.5m debt financing with Bank of Scotland. Nectar plans to invest more than £10m in developing a chain of unbranded public houses across the North of England and Wales over the next 18 months. The pubs will be managed by Honeycombe, which will earn a management fee a well as a share of the profits.
The deal marks a significant move into pub management contracts for Honeycombe, and the company is looking to do similar deals with other pub operators.
James Baer, joint chief executive, said: "We believe that this partnership could prove to be an innovative and repeatable formula that provides an additional stream to our growth plans, alongside further organic expansion. It creates a new profit centre to the business, alongside Honeycombe's Inns & Taverns and Venue Bars Divisions, broadening as well as increasing the potential earnings of the company."
Clive Preston, Chairman of Nectar, added: "We aim to use Honeycombe's renowned management expertise to develop a quality estate of unbranded pubs. A 'cherry picking' approach will ensure that the location, style and profitability of each site contributes to maximising capital growth for investors."
Honeycombe unveiled the deal shortly after it reported a 42 per cent increase in profits. The jump was largely due to last year's acquisition of Devonshire Pub Group.
Profits for the year to May were up to £2.26m from £1.59m. Sales were up 54 per cent to £32.4m from £21m.
Related articles:
Honeycombe profits soar 42 per cent (22 July 2002)
