BWG concludes €100m debt restructuring

BWG, the operator of the Spar and Mace retail brands, yesterday concluded a debt restructuring with a consortium of five lenders that will see an estimated €100 million wiped from the group's property borrowings.

The company, which had debts of about €300 million before the restructuring, has finalised a five-year arrangement with its lenders Bank of Ireland, AIB, Ulster Bank, Bank of Scotland (Ireland) and Blackstone.

BWG declined to comment on the exact terms of the deal agreed yesterday, but it is understood that its shareholders, including chief executive Leo Crawford, property director John Clohisey and finance director John O'Donnell, have provided warrants over a portion of its equity, believed to be up to 75 per cent.

This is understood to be in recognition of the property debt write-off achieved by BWG in the negotiations. Its property portfolio has dropped in value by about €100 million since the onset of the property crash in 2007, although its core retail business is understood to be performing relatively well.

The company was bought out by its management team in 2006 for a reported €390 million.

They will remain in charge of the business following the restructuring.

It is believed that there is no requirement for a fresh injection of equity under the deal. BWG had previously negotiated a one-year extension to its banking facilities, which were due to run out at the end of this year.

BWG was advised in the negotiations by Investec Corporate Finance.

In a statement last night, the company said: "BWG is pleased to confirm that it has agreed a refinancing with its existing lenders that has secured a new five-year banking facility, which includes a restructuring of the group's property-related debt." It continued: "The agreement positions the business to further capitalise on its leading position in the convenience food sector and build on the strengths of its Spar, Eurospar, Spar Express, Mace, XL symbol brands, and its cash-and-carry and food service business."

BWG operates more than 900 symbol stores across Ireland and Britain, as well as a chain of 22 Value Centre cash-and-carry outlets.

It employs about 1,000 staff directly, although there are about 20,000 employed in its stores, including owner-run franchise outlets.

The company has unlimited status, and does not have to file accounts with the Companies Registration Office, but it is understood that its turnover is about €1.2 billion, the bulk of which is attributable to its wholesaling business.

Although its property debts weighed on the company’s financial performance, its core retail business remained profitable before deductions for interest and tax.

Some of BWG’s larger UK-based rivals have also had to heavily write down the value of their property assets. Tesco, for example, recently announced it was taking an £800 million hit on the value of its UK stores.

Despite its struggle with property debts, BWG has continued to invest in the business in recent years.

The one-year extension to its banking facilities that was due to expire next month also released cash to fund a new €20 million distribution facility in west Dublin.

That debt deal also funded the purchase last year of Morris Brothers, a wholesaler based in Donegal with sales of about €30 million.

The company will record a net increase this year in the number of stores across its portfolio of brands.