SFI lives to fight another day

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Troubled bar group SFI has successfully re-negotiated its sizeable overdraft with a consortium of bankers, led by Barclays.The operator of the high...

Troubled bar group SFI has successfully re-negotiated its sizeable overdraft with a consortium of bankers, led by Barclays.

The operator of the high street chains Bar Med, Litten Tree and Slug & Lettuce has, for the moment, staved off talk of collapse with an agreed overdraft facility of £133.8m.

SFI shareholders had feared the banks would call time on the group and bring in receivers to break up the business given its perilous financial position.

The company had a calamitous 2002 when its aggressive expansion programme and over-zealous cash-flow predictions saw it run out of money. It had predicted that cash flow through the business would be £10m more than it actually was.

New finance chief Tim Andrews discovered a £20m black hole in the SFI books caused by accounting errors. The company had overstated the value of its assets by £10m and underestimated its liabilities by £10m.

Added to this, the tough trading climate the pub industry is currently experiencing led the company to issue a profits warning.

Founder and chairman Tony Hill resigned from his position.

The new banking agreement provides a facility of £133.8m until June 2005. A working capital facility of £7.5m had also been agreed, due to be repaid by May 31, 2003. This is an addition to an existing working capital overdraft of £10m.

Rumours before Christmas suggested SFI was preparing to sell the 30-strong Bar Med brand to pay down its debt burden.

The shares remain suspended.

Related articles:

SFI Group considers Bar Med sale (9 December 2002)

SFI bosses warned of cash flow crisis over a year ago (2 December 2002)

SFI 'ignored crisis warning' (25 November 2002)

SFI investors look to Hill for answers (19 November 2002)

Andrews: '£20m hole due to aggressive and lazy accounting' (13 November 2002)

SFI's Tony Hill leaves with nothing (13 November 2002)

Shares in SFI suspended (12 November

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