Pizza Express owner pumps in £80m to help pay down debt pile
The Chinese owner of Pizza Express has announced plans to pump another £80 million into the restaurant chain as it struggles under a £1.1 billion debt mountain.
Hony Capital will use the cash injection to buy back debt owed to bondholders in 2022 and bolster Pizza Express’s balance sheet.
It comes as Pizza Express remains in crunch talks over its mammoth debt pile, but the group moved to assure it has “no plans” to shutter sites in the UK and Ireland.
The group has to pay the first instalment of its debt repayments, worth £465 million in secured bonds, by August 2021.
Its next repayment for £200 million in unsecured notes is due to be repaid by the following year.
The chain also owes another £467 million in loans from Hony, though these do not have to be repaid.
Hony has also been hit by its investment in troubled office provider WeWork, which has been embroiled in funding issues.
Restaurant chain Pizza Express insisted its 482 UK and Ireland estate were not under threat of closure, despite falling UK sales.
In its update on debt refinancing plans, recent trading figures showed UK and Ireland sales falling by 1.1% over the three months to September 29.
The chain said trading conditions in the casual dining sector were tough amid Brexit uncertainty and “fragile” consumer confidence.
It also revealed that group underlying earnings slumped 8.7% to £19.6 million in the third quarter.
Despite the trading pressures, Pizza Express said: “Approximately 95% of our UK & Ireland restaurants are profitable and there are no plans for closures outside the normal course of business.”
It recently hired advisers at corporate finance firm Houlihan Lokey to help with the debt talks with creditors.
Speculation began swirling around Pizza Express in the summer as news of the debt talks surfaced.
It had been touted as the next on the list of high street dining casualties, after Jamie’s Italian collapses and peers Prezzo and Carluccio’s all shuttered sites last year.
Sources close to Pizza Express have been quick to deny it is close to collapse or considering a company voluntary arrangement (CVA).
However, the firm said in its latest update that it continues to assess its “future funding options”, in terms of investment and working capital.
The group is meanwhile investing in a drive to revamp its UK and Ireland business, including restaurant refurbishments – which cost it £500,000 for five sites in the third quarter alone.
Its third quarter trading figures also showed that, as well as the UK challenges, its international business was hit by “disrupted trading” in Hong Kong, which has been rocked by increasingly violent pro-democracy protests.
It said while overseas like-for-like sales rose 4.7%, or 0.3% with currency movements stripped out, the division slipped to an underlying loss of £300,000, due in part to the Hong Kong woes.