PizzaExpress Ltd. has announced the completion of its debt restructuring today, through which it is handing the keys of the U.K. restaurant chain to lenders, cutting debt, extending maturities and obtaining new liquidity.
In a statement today, the company also said it has appointed Allan Leighton and David Campbell as chairman and group chief executive, respectively.
The restructuring will hand control of the business to holders of PizzaExpress' £465 million of 6.625% secured notes via a debt-for-equity swap. They take ownership from Chinese owner Hony Capital, which bought PizzaExpress in 2014. Existing shareholders and holders of the group's £200 million of 8.625% unsecured notes were entitled to receive a minority equity position in the restructured group.
The transaction reduces total debt from £735 million to £319 million, and includes the immediate injection of £40 million of new capital from existing secured creditors. In addition, the business has a further £90 million tranche available from the new owners. The funds are expected to get the company through a second lockdown, which came into effect in the U.K. on Nov. 5.
The existing 6.625% of notes due 2021 issued by PizzaExpress Financing 2 and 8.325% notes due 2022 issued by PizzaExpress Financing 1 PLC have been delisted from Euronext Dublin.
The restructuring was implemented via the U.K.'s new Restructuring Plan procedure, which the U.K. government introduced this summer. The High Court of Justice of England and Wales sanctioned the Restructuring Plan on Oct. 29, 2020. In addition, PizzaExpress was granted recognition by the High Court for a separate Chapter 15 procedure filed in October.
In relation to the debt restructuring, PizzaExpress is also going through a Company Voluntary Arrangement, or CVA, which is typically used to cut rent bills or terminate leases on properties in the U.K. In the case of PizzaExpress, the CVA involves the closure of 73 restaurants.
Houlihan Lokey and Kirkland & Ellis are financial and legal advisers, respectively, to PizzaExpress.
Rumors of PizzaExpress starting discussions with creditors began toward the end of 2019. In November, it emerged that the company's owner, Hony Capital, would buy back £80 million of bonds — effectively injecting fresh cash into the business. In January, Hony injected a £10 million super-senior loan as talks to restructure debt got underway in earnest.
The company's financial difficulties were exacerbated in March, as U.K. governments announced the nationwide lockdown due to COVID-19. In March, HPS Investment Partners provided a £70 million super-senior term loan to repay the borrower's existing £20 million super-senior revolving credit facility, and the £10 million super-senior facility from Hony, as well as to fund general corporate and working capital requirements.