Little Chef's future set to be resolved
By James Mackintosh
Published:FT December 30 2006 02:00 | Last updated: December 30 2006 02:00
The future of one of Britain's roadside restaurants will be decided this weekend with Little Chef preparing to bring in administrators next week if emergency refinancing talks fail.
Little Chef, bought out from private equity group Permira for £52m by two entrepreneurs last year, has administrators at PwC on stand-by in case the talks fail, according to people familiar with the situation.
But the company insisted it was "business as usual" at the restaurants, famousfor all-day breakfast fry-ups.
"We are continuing with the negotiations," it said. "They are likely to be continuing through the weekend and we are hoping to have a conclusion around January 2."
The company has been trying to find a new coreshareholder since Lawrence Wosskow, who holds a 90 per cent stake, fell ill and withdrew from involvement in the summer.
Simon Heath, chief executive and holder of the rest of the shares, is leading the negotiations, which are thought to be with one potential investor and with the main creditors, both landlords.
It has hired restructuring experts at KPMG, its auditor, to help it find new money after a turnround plan failed to deliver as big a boost as hoped.
The 235-strong chain, with 3,500 staff, started as an11-seat restaurant in Reading. It now claims 20m customers a year, serving 13m eggs and sausages and 10m cups of tea.
But it has been struggling with changing customer demand, recently introducing "lighter" menus and a specialist coffee shop brand.
The chain raised £60m from a sale-and-leaseback deal on 65 of its properties with Arazim Investment, an Israeli property company, completed in February.
The company hoped to use the money to modernise itsoutdated premises and expand the Coffee Tempo cafés.
But when its financial plan stumbled, the increased rental - combined with rents paid to Travelodge, its former parent under Permira's ownership - forced it to start looking for a rescue.
Little Chef's troubles come as roadside services are rapidly shifting ownership.
Macquarie, the Australian infrastructure group, this year bought Moto, the biggest motorway services chain while the Japanese owner of RoadChef is discussing selling it to Israel's Delek for up to £450m.
Welcome Break, the third big operator, has indicated it is open to bids.
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may be there's some tie in that can be done here? sounds like they need a strong coffee brand
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