TGI Fridays owner Hostmore files for administration
The future of the group had been in doubt since it abandoned plans for an all-share acquisition of TGI Fridays in the US earlier this month, and in a business update today (18 September) it was confirmed that Daniel Smith and Julian Heathcote of Teneo Financial Advisory Limited had been appointed as joint administrators.
Hostmore said that filing for administration would have no direct impact on the operations of the trading subsidiary, Thursdays, and that all restaurants continue to trade.
It added a sale of the group’s 87-strong corporate estate was ongoing and still expected to be completed by the end of September.
Hostmore announced on 9 September that it had abandoned its all-share acquisition of TGI Fridays’ US business after the American group lost control of TGIF Funding, which holds legal title to the franchise agreement royalties and other various fees and revenue from intellectual property of the TGI Fridays business.
Restructuring experts at Teneo were tasked with leading the hunt for potential buyers of TGI’s UK restaurants, and a deadline was set for the end of the month for any asset sales that will help to repay the company’s main lenders, NatWest and HSBC.
However, Hostmore previously warned that any sale is expected to fall short of covering the group’s debts, meaning shareholders are unlikely to recover ‘any meaningful value’.
As a result, the group’s board said it expected the company to be wound up and delisted from the London Stock Exchange following the completion of any sale process.
Industry sources told The Telegraph this week that the prospect of finding a single buyer for the whole TGI UK estate, which also encompasses Fridays and Go, a fast casual offshoot of the TGI Fridays brand that has a single site in Dundee, is doubtful.
Rival chains may be tempted to cherry-pick stores in the most attractive locations, though, and company insiders have stressed that the TGI Fridays brand could survive if a new owner decides to take it on.
A statement on behalf of Matthew Bibby, CFO of Hostmore, said that while the group had worked ‘tirelessly’ on a turnaround programme for the business, it had been unable to sufficiently reduce its losses.
“The board inherited a very challenging set of circumstances,” it said.
“But a focus on reducing costs, revising the group’s capital allocation policy and implementing both board and senior management changes, meant that the group was able to reduce annualised expenditures by £12m, significantly reduce losses from unprofitable stores, and operate the group’s stores at a best in class efficiency level for the sector, all while improving guest scores to our highest levels on record.
“Unfortunately, all of the board’s efforts to implement a lasting solution to support the long-term financial future of the business came against a highly challenging trading and macroeconomic backdrop, and efforts to create value for shareholders through the proposed acquisition of TGI Fridays, while well-advanced, encountered adverse events outside of the board’s control.”
