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PizzaExpress in takeover talks

A group of senior bondholders to PizzaExpress is in talks to potentially provide new funding in a deal that could see them take over much of the company from owners Hony Capital.

Creditors including Cyrus Capital Partners, HIG Capital and Bain Capital Credit have proposed injecting cash into the casual-dining chain in exchange for taking control of its core UK and Irish business, according to people familiar with the matter.

As part of the deal, Hony Capital may keep the Chinese arm, the people said, asking not to be identified because they’re not authorised to speak publicly. The terms of the proposal aren’t set and could change, they said.

External spokespeople for PizzaExpress and Bain declined to comment. Representatives for Cyrus Capital and HIG didn’t return calls and emails from Bloomberg seeking comment. Officials at Hony didn’t respond to a request for comment outside business hours.

After buying the company in 2014, Hony expanded its branch network into China at a time when Britain’s retail sector was starting to struggle amid changing consumer habits. PizzaExpress profits came under pressure and last year the company hired advisers to prepare for talks with creditors over its debt, which stands at around US$1.38 billion.

Hony bought back some of PizzaExpress’ riskier bonds last year in an attempt to fend off a potential creditor takeover and keep control of the business. Since then, however, the Covid-19 crisis has disrupted its efforts to implement a financial overhaul.

Early in May, PizzaExpress said it partly used credit lines provided by investment fund HPS to repay a revolving-credit facility and a super-senior loan from Hony Capital, and asked for bondholders’ consent to push back publication of its accounts.

The possibility of creditors taking control of PizzaExpress was first reported by Britain’s Times newspaper.

©2020 Bloomberg L.P.

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