UK’s largest pub group Stonegate struggles to refinance £2.2bn Debt, giving it an uncertain future


Stonegate Pub Company, the UK’s leading pubs and bars group boasting a network of over 4,400 establishments including popular chains like Slug & Lettuce and Be At One, has issued a warning about its financial viability as it struggles to refinance its substantial £2.2 billion debt.

Despite ongoing discussions with potential lenders, the company has yet to secure new loans to replace existing debt set for repayment in June 2025. This predicament forced Stonegate to raise concerns about its ability to continue operating as a going concern, with uncertainties surrounding its capacity to meet financial obligations and liquidate assets.

Stonegate, based in the Cayman Islands and owned by private equity firm TDR Capital, expanded significantly in 2019 with the acquisition of Ei Group for £1.3 billion. However, this expansion came with a hefty debt burden of £1.7 billion, coinciding with the onset of the COVID-19 pandemic, which severely impacted the hospitality sector through successive lockdowns.

Efforts to refinance its debts have been ongoing since at least February, with Stonegate appointing bankers and lawyers to explore options amid challenging conditions in debt markets and the hospitality industry. Rising costs and subdued consumer demand have further strained margins for pub and restaurant firms, leading to closures and insolvencies across the sector.

Stonegate’s financial struggles are underscored by its significant debt load, with total debt exceeding £3 billion and substantial finance costs incurred in the previous year. Despite a rise in revenue to £1.7 billion, the company reported losses nearly doubling to £257 million, attributed to various costs including negative revaluation of brands and finance costs.

David McDowall, Stonegate’s CEO, expressed confidence in the company’s long-term prospects, highlighting recent improvements in revenue and profitability. However, challenges remain, particularly in refinancing existing loans and navigating the evolving hospitality landscape.

Stonegate’s future trajectory hinges on its ability to address financial pressures, optimize assets, and adapt to changing consumer preferences. The company faces scrutiny over its handling of dynamic pricing strategies and compliance issues related to minimum wage payments, underscoring broader challenges in the industry.

As discussions with potential lenders continue and operational strategies evolve, Stonegate remains focused on supporting its pub portfolio and capitalizing on upcoming sporting events to drive momentum in the months ahead.