Globe Pub Company, the pub operator owned by property entrepreneur Robert Tchenguiz, is to call in financial advisers to look at 'operational issues' within the group after another quarter of poor trading left it within inches of breaching its debt covenants.
In a quarterly update to bondholders, the group, which owns 424 pubs, said beer sales had dropped 8% in the three months to November 29, an acceleration on the 6.5% decline reported in the previous quarter.
Earnings before interest, tax, depreciation and amortisation for the period fell 20% to £5.5m, while the cost of servicing debt rose 2% to £4.4m.
Trading has deteriorated to such an extent that the group’s ebitda for the past two quarters stood at only 1.26 times the cost of servicing its debt. The company, which has already triggered a 'cash trap' clause in its securitised debt agreement, will breach the covenant on its securitisation if this debtservice cover ratio falls below 1.25 times.
Financial Times, The Times