Case Studies

In March 2002, LGV, together with Cinven, Princes Gate (Morgan Stanley) and Enterprise Inns, acquired the Unique Pub Company and Voyager Pub Group (the "Estate") from Nomura. The deal involved the private equity consortium investing €605m for a 83.2% stake, while Enterprise Inns, the leading publicly quoted operator of leased and tenanted pubs in the UK, has taken the balance.

The Estate is one of the largest pub operators with more than 4,000 pubs located throughout the UK and generates more than €350m of EBITDA. The tenanted pub model, as employed by Enterprise Inns, has become increasingly popular. While the day-to-day running and upkeep of the properties is delegated to the tenants, the company receives a steady income stream both from rents and selling supplies to the pubs.

The tenanted pub market remains highly fragmented and it is expected that there will be further consolidation in this market. Enterprise Inns is well placed to capitalise on this as it has been granted a call option to purchase the balance of the equity, subject to LGV and the other members of the private equity consortium almost doubling their money after two years, an arrangement that was well received by the London stock market.

The deal capitalises on LGV's expertise in the pub sector (LGV also backed Enterprise Inns before it was a quoted company) and builds upon its experience in supporting trade partners.

Within 6 weeks of completing the deal, the €948m securitisation bridge facility was refinanced and 23% of the original equity was returned to the institutional investors. In August, a €1,351m tap issue was launched to increase the existing Unique securitisation.

Despite considerable market volatility, the new issue was very well received by the market and was oversubscribed. Competitive pricing was achieved and Unique's weighted average cost of debt now stands at 6.9%. With €2,857m bonds in issue Unique now represents the largest pub securitisation.

On an operational front, the conversion of the 900 Voyager pubs from managed house status to lease is in the final stages of completion and the Voyager head office has been merged with that of Unique.

LGV successfully exited Unique in March 2004. Click here to see the press release.