TDR launches £380m bond for pub operator

Stonegate, the UK’s largest privately owned pub operator, has refinanced its existing debt by issuing a £380m bond.

Stonegate Pub Company, which is majority owned by London-based private equity firm TDR Capital, has launched a £380 million (€458.9 million; $632 million) senior secured bond, according to a statement on its website on Tuesday.

TDR Capital, together with management, owns 95 percent of Stonegate and will receive some of the proceeds from the refinancing. The UK’s largest privately held managed pub operator has debt of £25 million in the form of a revolving credit facility, a spokesperson for TDR said.

Proceeds from the senior secured notes offering will be used to repay all outstanding debt under existing senior facilities, an existing shareholder loan, and a shareholder payment, the company said in a statement. Proceeds will also be used for general corporate purposes and to pay certain fees and expenses in connection to the offering and related transactions.

Barclays launched the offer ahead of what UK daily The Times said was a rumoured £800 million IPO later this year. 

A spokesperson for TDR Capital declined to comment on its exit strategy for the investment, while a spokesperson for Stonegate was unable to comment on the exact nature of the debt offering.

Last month, Stonegate announced that Simon Longbottom would replace Toby Smith as chief executive at the firm.

TDR acquired 333 pubs from pub operator Mitchells & Butler (M&B) for £373 million in August 2010. In October 2011, Stonegate’s chairman Ian Payne confirmed TDR Capital had funded the acquisition of the M&B pubs entirely from its own resources and that there had been no bank debt put into the deal. Just a few months previous to that, Stonegate merged with Town & City Pub Company, creating an estate of 560 pubs.