Speculation rife that PizzaExpress will look to restructure £1.1b debt pile

Speculation that PizzaExpress is heading for a restructuring of its £1.1b debt pile is rife following reports advisors have been appointed.

Bloomberg reported on Friday that the casual dining chain, established by Peter Boizot in 1965, has enlisted Houlihan Lokey as it plans negotiations with creditors.

In its 2018 annual report the casual dining chain, bought by Chinese private equity firm Hony in 2014, reported debt levels of £1.1b, £607.7m of which was due to external creditors with the remainder lent by the parent company.

The report states that repayments of £465m are due in 2021, with a further £200m falling in 2022.

The 2018 report saw revenue increase by 1.6%, thanks largely to 38 new openings which off-set like-for-like sales decline of 2%. The company reported increased competition leading to a challenging market in mainland China, while cross-industry cost pressures hit profits in the UK.

The loss before tax reported for the year was £55m, although this fall into the red is attributable to the interest on its debt, without which it would have been profitable.

Earlier this year a financial update for the 26 weeks ending 30 June 2019 reported that group sales had increased by 2.6% with like-for-like sales broadly flat. However revenue growth continued to be offset by rising costs with earnings before interest, tax, depreciation and amortisation (EBITDA) down 7.7% to £32.4m.

In the last 12 months PizzaExpress has explored ways to invigorate its offering, including trials of by-the-slice, grab-and-go offering Za and increased focus on the bar offering in several sites.

Both PizzaExpress and Houlihan Lokey declined to comment when approached by The Caterer.