Bank covenants breached but Utopian 'comfortable'

Jan 12 2009 by Graeme King, The Journal

BAR and restaurant operator Utopian Leisure has revealed it breached its banking covenants in the last year, but is still continuing to trade and will soon open a new outlet.

The Newcastle company headed by high profile leisure entrepreneur Bob Senior has reported in notes to its recently published 2007 accounts, that since that period ended, there was an occasion when it was not able to remain within the financial bounds laid down by its bankers.

The breach relates to bank debt of £13.38m and means that technically Utopians banks could demand repayment at any time. However, Utopian makes clear that more than £6m of the £13.38m has now been repaid, and the company clearly still has a working relationship with its bank.

Utopians auditor KPMG said that following the breach of covenant, there was material uncertainty which may cast significant doubt on the companys ability to continue as a going concern.

When Utopian was formed, it originally acquired two Newcastle bars Sam Jacks on Newgate Street and Bar 55 at the east end of Mosley Street.

Since then, Bar 55 has closed, but Utopian has diversified into running Chinese restaurants under the Fat Buddha brand, takeaways known as Little Fat Buddha and a Belfast nightclub known as Box.

A Little Fat Buddha is now operating in Darlington, and Utopian says it is just weeks away from opening another outlet on Station Road in Fulwell, Sunderland.

In notes to the companys accounts, Utopian said it was in discussions with its banks who have indicated that they will continue to make these loans available to the company, at existing levels in the form of an on demand facility.

The directors have no reason to believe that this facility will not continue to be made available following finalisation of the renewal process.

Utopian was formed by Mr Senior, a founder and former managing director of Ultimate Leisure (now Premium Bars & Restaurants), finance director Tim Wynn and entrepreneur Allan Rankin.

Yesterday, Mr Senior said: I have no comment to make on our accounts as filed at Companies House.

We are experiencing the same tough trading conditions that are well documented elsewhere in the leisure trade.

However, we are trading relatively comfortably in our existing units, and we are intending to roll out the Little Fat Buddha brand in Sunderland in late January or early February.