Property group snaps up L&E pub leases
The Flodrive Group has acted quickly to buy the fixture and fittings on 240 hotels and pubs leased to London & Edinburgh Swallow Group (LESG).
Flodrive, which is the property vehicle of the Khalatchi family, already owns the freeholds and is rumoured to have paid just over £1m to buy-out the nominal value - £5,000 to £10,000 per venue - of the leases held by LESG.
A source said: "This is merely Flodrive moving to buy-out the head leases to remove the administrator Ernst & Young from the equation."
Roy Bailey, one of the Joint Administrators, said: "We are delighted to have made early progress in salvaging a material part of the hotel and pub portfolio and importantly securing the jobs of almost 2500 employees."
Another source said LESG was on course to have lost around £30m over a two-year period prior to being placed in administration.
An estimated 300-plus separate private investors own the freeholds leased to LESG.
Some doubt surrounds the legal position of individual licensees who hold sub-leases.
But one property source said: "The freehold owners will still need someone to run these pubs and are not going to turf out licensees.
"I believe that the tenants are all still protected in law."
However, doubt surrounds the fate of large sums of money paid by licensees for their beer orders at the start of last week.
Scottish & Newcastle UK declined to honour the beer orders placed last week by licensees, many of whom were forced to buy out-of-tie.
Meanwhile, employees of LESG's managed division are also out-of-pocket after having three days pay docked from their wage packets in the run up to administration.
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Your CommentsDavid Pearce via email 18/09/2006"London & Edinburgh have gone into liquidation? Now theres a surprise. Did you guys never guess from the way that their business operated that they were just in it to milk the cash from wherever they could? Come on surely you wern't so green behind the ears."
Ken Staniforth TechIOSH, FBII via email 18/09/2006"With the demise of L&E, what a fantastic opportunity for the sitting licensees to get together and propose a 'management buyout' before it is acquired by yet another pubco, for the greed of it's shareholders to make vast fortunes on the back of hard working licensees.
These licensees would then have the power to start the ball rolling to 'acquire' other houses that are discarded by pubcos and breweries, give the sitting licensees the same opportunity as them, and eventually realise a licensees co-operative that makes money for........LICENSEES."
Graham Allman via email 20/09/2006"You could say that it was an accident waiting to happen. L&E has been poorly managed both day to day and from the board room for a long period of time. There has been many suppliers complaining about their treatment by L & E for sometime now. I believe that ,although i do not know of the new owners of these particular pubs , they should be given a fair chance to get their house into shape for the benifit of all.
Neither do i believe that this is the start of the "pack of cards" collapsing , there are many well managed pubcos out there who have well structured finance behind them. Dont "lick your lips" yet , hoping for a cheap deal."
Dave Pearce via email 20/09/2006"If the "head leases" have been sold for £5-10K each, what a shame the individual Licensees didn't get a chance to buy them. That would be a VERY small price to pay for a free of tie lease!!"
