Britain's largest pub group is exploring a radical £1 billion sale of around 1,000 establishments as it confronts a massive financial shortfall, according to recent reports.
The Debt Burden and Strategic Response
Stonegate Group, which operates 4,300 pubs across the UK including popular chains Slug & Lettuce, Be At One, and Yates, is in discussions about selling approximately a quarter of its portfolio. This dramatic move comes as executives attempt to address £3 billion in accrued debts that have accumulated following the company's 2019 merger with rival Ei Group.
The timing proved particularly challenging, with the Covid-19 lockdowns devastating the hospitality industry just months after the merger completed. Stonegate had previously attempted to sell some pubs without success before securing a £638 million loan from private equity firm Apollo, using their premium "platinum" collection as security.
The Platinum Portfolio and Sale Options
The 1,034 pubs under consideration form a separate entity within Stonegate, comprising the company's best properties. Industry experts suggest this premium collection could be sold without negatively impacting the group's remaining establishments.
A crucial factor in the timing is that a non-call period on Apollo's loan, which has prevented Stonegate from selling or refinancing these pubs, is scheduled to end in January. According to The Times, one option being considered involves selling the pubs in batches of hundreds rather than pursuing a single transaction for the entire portfolio.
Broader Industry Challenges
The potential sale occurs against a backdrop of significant challenges facing the UK hospitality sector. Stonegate reported a £214 million loss in 2024, despite transformation plans implemented by chief executive David McDowall, who joined the company from BrewDog in 2023.
The industry continues to grapple with the lingering effects of pandemic restrictions, the ongoing cost of living crisis, and recent increases to employers' national insurance contributions and the minimum wage. These factors have created a perfect storm for pub operators across the country.
Stonegate Group has been approached for comment regarding the potential sale and its broader financial strategy.
