- Wednesday, May 08, 2024
By: Pramod Thomas
BILLIONAIRE Issa brothers are now in a strong position to take control of Caffe Nero as they have bought around £140 million of loans from Swiss private equity firm Partners Group via investment bank Morgan Stanley.
Partners had written to Caffe Nero boss Gerry Ford last week expressing a number of concerns about the state of the company’s finances, reported The Telegraph.
The group informed Ford that Caffe Nero is at risk of breaching its banking covenants – strict rules that govern loans – and that the company will struggle to refinance £145m of senior ranking debts that are due to be repaid next year, the report added.
This week, the Blackburn brothers will find out if regulators sign off their £6.8 billion acquisition of supermarket chain Asda.
Last November Caffe Nero, which employs more than 6,000 people in the UK, launched a company voluntary arrangement (CVA), a radical restructuring process that allows companies to reduce rent owed to landlords.
The move was disrupted by the Issas, who submitted an eleventh-hour bid to buy the company outright. Although the swoop was rejected, the CVA remains subject to a legal challenge.
“”We have had a successful winter and spring trading and are generating positive cash flow and are ahead of forecast for the last five months,” a spokesman for Caffe Nero told The Telegraph.
“We are forecasting no covenant issues in our projections over the next 12 months and we look forward to an even brighter future post May 17 when we open up our cafes fully to the public.”
A spokesman for the Issa brothers declined to comment.
Issa brothers have built one of the world’s biggest petrol forecourt empires with private equity firm TDR Capital. They were awarded a CBE in the Queen’s Birthday Honours last year after striking a deal to buy a majority stake in Asda
