Nov 11, 2019

PizzaExpress bondholders escalate push for debt restructuring

PizzaExpress bondholders have warned the restaurant chain that its future is at risk, urging its Chinese owners to work with them on a financial restructuring. Analysts from S&P on Monday said that a "Distressed exchange or a debt restructuring appears to be inevitable within six months", downgrading the pizza chain's debt given "a material refinancing risk on its capital structure, reflected by unsustainable leverage levels and negligible cash flow generation". One person familiar with the investors' thinking said bondholders would be open to a debt-for-equity restructuring in which they could swap their loans for ownership of the business while putting in new money to help improve the group's financial situation. Hony said on Wednesday that it wanted to buy £80m of the chain's unsecured junior debt at a 20-40 per cent discount to the face value of the bonds. Hony's potential ownership of just over half of the junior debt has caused analysts and investors to question whether it could turn these bonds into senior debt, or assign the debt to a key part of the business, such as the brand, which would secure greater control over the future of the company.

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