UK: Heineken rescues Globe Pub Co from collapse
Heineken has swooped to acquire Globe Pub Company in the UK, in order to prevent the group's financial collapse and protect a long-term beer supply deal.
Heineken will provide GBP180m (US$295m) to a company named EBP Pub Company Limited, which will acquire Globe and its 425 pubs on Heineken's behalf, the Netherlands-based brewer said today (29 October).
The deal pulls Globe back from the brink of collapse and follows the firm "being in breach of its financial covenants", Heineken said.
Heineken, via its acquisition of Scottish & Newcastle last year, has a 30-year beer supply deal with Globe. The brewer also owns a significant amount of Globe's debt.
EPB Pub Company is controlled by FEOH Investments Ltd, which is advised by the R20 investment firm controlled by Globe owner Robert Tchenguiz.
Proceeds from the GBP180m deal will primarily be used repay Globe's senior class A1 notes. Heineken owns 92.8% of the class A1 notes, representing a face value of GBP175m.
"As a result of repayment of the notes owned by Heineken, it is expected that the transaction will be broadly cash flow neutral in 2009 for Heineken," said the brewer, which also owns 31.6% of Globe class B1 notes worth GBP18m.
Zolfo Cooper LLP was brought in as administrator for Globe today, Heineken confirmed.
The group has been hit hard by a tough period for the UK pub and beer sector, with the latest industry figures showing that around 50 pubs are closing down every week.
On-trade beer sales in the UK fell by 5% in the third quarter of 2009, industry figures released today show.
The wave of major consolidation activity in the beer market over 2008 was followed by weakening volume growth in 2009 as the economic downturn put a dampener on bullish tactics. With the global beer l...
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