Laurel considers administration for dud leaseholds
Laurel Pub Company is considering a controlled administration for part of its business.
The company is in discussions with its banks over a plan that would allow it to ditch 40 or so poorly-performing leasehold sites.
The strategy has been a route followed by a number of companies in the sector in recent years.
Laurel is thought to have seen deteriorating trading conditions in a number of leasehold venues within its wet-led segment of its estate.
The controlled administration route would allow the company to re-shape its estate by removing those sites that are a drag on performance.
The company has a number of pretty toxic leasesA source
One source said: "It reflects some fairly poor buying strategies in the first place. When nobody wants to buy leasehold sites that are losing a lot of money it leaves very few options."
A second source said: "The company has a number of pretty toxic leases."
Laurel is known to have had a number of poorly-performing leasehold sites on the market through Davis Coffer Lyons for more than a year.
Over-priced
Some observers believe the company paid too much to buy 98 sites from SFI Group - it paid £80m which equates to £816,000 per leasehold.
Industry sources suggest the next best offer was around £40m lower and involved fewer sites. The remaining part of SFI Group - 52 sites or so - sold for less than £2m.
Robert Tchenguiz's R20 spent around £560m acquiring the constituent parts of Laurel.
In its most recent financial year to 25 February 2007, Laurel lost £12.26m on a turnover of £186.8m.
Its operating losses widened to £4.3m in the most recent year compared to £3.6m the year before.
Discussions have been underway with its bankers with a view to restructuring its debts, with a resolution hoped for before the end of next month.
It is thought that Laurel's bankers may want the estate re-shaped as a pre-condition of further support.
A source close to Laurel said: "It's a debate we are having with our banks at the moment. We are trying to refinance which is tough in this market. We are trying to keep it as a whole.
"We have some leasehold pubs on the wet-led side that with the smoking ban are not performing well."
The source indicated that controlled administration was the obvious route if the debt market fails to recover.
