Stonegate Group is advancing plans to offload more than 1,000 pubs in a deal that could raise £1bn ($1.32bn) as it seeks to trim a multibillion-dollar debt burden, according to The Sunday Times.
Senior leaders at the operator, which runs Slug & Lettuce and Be At One, have been in talks with potential advisers about options for almost a quarter of its 4,300 venues.
The company generated revenues above £1.7bn in 2024 but is carrying more than £3bn of borrowings as of 29 September 2024, much of it stemming from its 2019 merger with Ei.
The pubs earmarked for potential disposal – 1,034 sites known internally as the “platinum” portfolio – are regarded as some of Stonegate’s strongest assets.
Industry sources cited by the newspaper suggested that the package could fetch up to £1bn.
A previous attempt to sell a similar number of pubs in 2023 was unsuccessful.
Subsequently, Stonegate securitised the platinum assets through a £638m loan from Apollo, carving them out within the business and easing immediate financial pressure.
A pub sector source told the publication: “The situation they ended up in is a structure whereby they can sell off chunks of that business without it damaging the rest of [it].”
Managers are revisiting options as a non-call period on the Apollo financing ends in January 2026, removing restrictions on selling or refinancing the pubs.
One route under consideration is selling the assets in tranches of several hundred rather than a single transaction, the report added.
Owned by private equity company TDR Capital, Stonegate was created in 2010 through the purchase of 333 pubs from Mitchells & Butlers and grew via a series of acquisitions.
Its £3bn tie-up with Ei made it the UK’s largest pub landlord, overtaking Greene King, but left the company highly leveraged shortly before Covid-19 closures hit the sector in 2020.
Higher interest rates have since increased strain on heavily indebted operators.
Stonegate’s finance costs reached £455m in the year to September 2024, according to its accounts.
Pub companies have also faced higher wage bills following increases in employers’ national insurance and the minimum wage.
The platinum portfolio is understood to be producing £90m in earnings before interest, taxation, depreciation and amortisation. The sites are all freehold, located across England and Wales, with none in Scotland.
Sources told the newspaper that “new people” such as private equity buyers may be interested in acquiring groups of pubs, given the scale of the offering.
“Stonegate weighs £1bn disposal of 1,000-plus pubs to cut debt” was originally created and published by Verdict Food Service, a GlobalData owned brand.