Caffè Nero ends EG Group takeover bid with £330m debt refinancing

14 January 2022 by
Caffè Nero ends EG Group takeover bid with £330m debt refinancing

Caffè Nero has completed a £330m debt refinancing, effectively ending a takeover bid from the Issa brothers' EG Group.

Last April Mohsin and Zuber Issa, who own the Leon restaurant chain, acquired £160m of Nero Holdings' mezzanine debt.

They used this to try and gain control of the company from chief executive Gerry Ford and backed a legal challenge to the coffee chain's company voluntary arrangement (CVA), but a judge dismissed the case in September.

This week Caffè Nero entered into a new debt agreement with Carlyle, HSBC and Santander. As a result, the company has a six-year loan of approximately £330m with additional facilities of £85m available for growth opportunities. It said it has reduced its debt exposure by c.15%.

Ford retains majority ownership of the group, alongside his family and friends.

"As a result of this new debt agreement, the EG Group is no longer a holder of any of the Caffè Nero Group's debt," the company said.

Caffè Nero was founded in 1997 and currently operates four brands, including Coffee #1, Harris + Hoole and Aroma, across 1020 stores in 10 countries. It has 650 Caffè Nero branded stores in the UK and employs 7,700 people across the whole business.

Pre-pandemic the group had registered 86 consecutive quarters of positive like-for-like sales growth. Business bounced back in the second half of 2021 as coronavirus restrictions lifted, with sales in November tracking at 90% of 2019 levels.

Ford said: "We were a strong business before Covid-19, and now having weathered the pandemic, survived a hostile takeover attempt, won the court case against the EG Group and paid back our emergency banking loans over the last 21 months, we have shown incredible resilience and I believe we will come out of these challenging times even stronger than we were before."

"I now look forward to taking the Caffè Nero brand to new heights as we forge ahead with our new partners."

Image: AVM Images / Shutterstock

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