Pub chain is bought back

Apr 7 2008 by Chris Knox, The Journal

THE pub and restaurant chain that runs Yates’s and the Slug and Lettuce in Newcastle has closed 90 of its loss making sites after being bought back out of administration by its owner.

Laurel Pub Company was put into administration last week after being hit by the smoking ban and tightening consumer spending. However, its owner Robert Tchenguiz has bought back the majority of the business in a complex series of transactions, valuing it at around £350m and washing his hands of the 90 loss making sites.

Of the 378 sites that remain, six are Yates’s pubs in Darlington, Durham, Middlesbrough, Hartlepool, Newcastle and South Shields, two are Slug and Lettuce restaurants in Newcastle and Durham and two are La Tasca restaurants in Newcastle and Durham.

Two North East casualties are Liquid bar in Newcastle’s Cloth Market, which has ceased trading as part of the cull and the Hog’s Head in Middlesbrough, which is now in the hands if administrators Kroll. The remaining sites will now be managed by two separate companies, Bay Restaurant Group, which will manage 217 sites under the La Tasca, Slug and Lettuce and Ha Ha Bar and Grill brands as well as 24 sites that are yet to be branded and Town & City Pub Company, which will operate 161 high street bars, including the Yates’s chain.

A spokesman for Laurel said: “The closures are regrettable but the pubs were costing the company more to run than they were making.”

Mr Tchenguiz failed to refinance Laurel’s debts last September after the £123m purchase of Spanish restaurant chain La Tasca, blaming the credit crunch for the delay. The 90 sites, which were costing Mr Tchenguiz around £9m in rent each year, are now in the hands of administrators Kroll.

Iranian-born Tchenguiz bought Laurel in November 2004 through his investment vehicle R20, then in May 2005 purchased Yates Group for £202m. A month later he bought 98 SFI Group pubs for an estimated £80m and in April last year purchased La Tasca. Analysts have questioned the sustainability of a business model which has enabled Tchenguiz to amass a £350m pub empire in such a small space of time.

Andrew Miller, head of the Newcastle office of Barclays Wealth, said: “There are question marks about the way he is financing these deals as he has never fully disclosed how much of the business is serviced through debt.”