The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
When is the 3 quarter update anyone
I'd be happy with 75p, I'd be happier with a £1 .
Hopefully Q3 update is +ve on pubs and reports completion of leisure sale. Then there have to be some open Qs as to why SP is languishing where it is. Ripe for PE take-out and breakup. 75p offer would pose some Qs to large holders and underpin an upgrade on SP.
Due to the shocking weather we had to experience some opportunistic but essential shopping time the Metro Centre. I attempted to increase my satisfaction of the sorry Sunday affair by getting lunch in Wagas... I couldn't! The queue was too big for my allowable lunch time slot, also, the upstairs open. I witnessed a Full restaurant which is approx:
150+ plus covers for 2 hours
300 servings @ £20 each, £6000
Half that for the rest of the day. So my restaurant low estimate turnover approx. £1500 and hour
10 hours a day for 5 days is 75000 a week
3.6MIlion a year based on 48 weeks
low estimate for Group turnover for Waga:
3.6 million X 150 restaurants is 540Million
EBITA 15% 81million
Estimate 7 x EBITA
Market cap 567 Millions
+ a couple of hundred mill for Brunning an Price and others.
Group Market cap *750Mill* or near a £1.00 per share . (based on Metro Centre only)
HUGE positivity in the whole place even Chiquito's was full!
My best guess is lack of confidence from the market, its related to RTN sitting on bad assets far too long and economy based hesitancy .
For long termers like myself who bought in and averaged down from the Waga transaction, This company structure is where I believe it should be now, and eventually (black swans aside) will re rate to market cap of approx. 750Mil Brunning & price and Waga.
It’s odd that RTN has not significantly re-rated then. If worst performing assets have been off loaded (alongside costs) then what’s left should much more valuable and focused - SP hovering around 50p post a good interim update and change of Chair does not reflect that. So either mis-priced, serious concern on future performance of group -or- yet to reprice. I don’t know what sparks a reprice? General market sentiment?? Bemused
When for lunch today, no queues however is still very busy. No signs of cost of living crisis there!
The activists wont wait that long, they'll want a market beating return ASAP. The recent RNS was good and I'm sure they will be disappointed the news didn't pique more interest to drive the price up.
I expect there will be more action and pretty soon.
Confirmation that Barburrito is excluded from sale is good. The leisure division had a positive EBITDA in H1 last year of £5.1m so the FY £65m loss was primarily related to impairments and exceptionals last year. Looks like Big table got a good deal from RTN but agree given current trading best to get rid of these leisure sites so at least from 2024 onwards we will not get continual write downs associated with he leisure division as we have had for a number of years. Full year accounts will be interesting!
Good write up in The Times;
The Restaurant Group called time on its lossmaking leisure division yesterday, announcing a deal under which it is paying the Big Table Group £7.5 million to take the business off its hands.
Big Table, the operator of brands such as Las Iguanas, Banana Tree and Café Rouge, is acquiring 75 restaurants, together with the central costs and 3,000 employees needed to run the sites, most of which trade under the Frankie & Benny’s and Chiquito brands.
The buyer, owned by Epiris, the private equity firm, is paying a nominal £1 for the business, but it will receive a cash sum of £7.5 million in recognition that it is taking on a business that made a loss last year of £65 million.
Despite the unusual nature of the deal, with the vendor paying a dowry to the seller, it went down well with the market, sending shares in The Restaurant Group up by 3.6 per cent, or 13⁄4p, to 491⁄4p.
It not only removes the group’s weakest business and about £50 million of lease liabilities, but also allows it to focus on its successful Wagamama, Brunning & Price and concessions units. The sale excludes the 17-outlet Barburrito estate.
Under pressure from activist investors led by Oasis Management, The Restaurant Group has been looking “to further accelerate margin accretion and deleveraging”. The group said it continued to “actively explore its strategic options” and some analysts believe it may switch its attention to selling its airport and railway concession business. James Wheatcroft, an analyst at Jefferies, said: “Further divisional disposals are possible, which would drive more deleveraging and, potentially, dividends.”
The Restaurant Group, formerly known as City Centre Restaurants, entered the pandemic with about 650 sites in the UK, plus a largely franchised overseas Wagamama business.
The exit will be hailed as another victory by Oasis, now the group’s biggest shareholder with a stake of almost 18 per cent stake. It has accused the company’s board of “strategic stagnation” and has called on it to “realign its priorities” and address its poor shareholder experience. It said The Restaurant Group had presided over “one of the worst-performing share prices of any UK leisure company” and criticised the “unpalatable” pay of Andy Hornby, 56, who became chief executive in 2019.
Its calls for management change secured partial success last week, when Ken Hanna, 70, the chairman, said he would be leaving at next year’s annual meeting.
Big Table, born from the ashes of the administration of Casual Dining Group in 2020, is expected to convert some of The Restaurant Group sites to its recently acquired Banana Tree brand, a pan-Asian concept with 15 sites. The deal will increase its estate from about 160 outlets to more than 230.
No mention of Barburitto so presuming it is excluded from the sale? I hope so, as they only got it last year!
Peel and shore already implying upgrades so momentum should start building here now. Turning point which the market will recognise
I think the key message that the rns is delivering is of a confident ceo who is focussed on the interest of investors, My hope is that the analysts do their thing and upgrade the stock.
The crap in this business is gone, the cash burning element out. Net debt comes tumbling down and you’re now left with the best brands and strong cashflows that can grow and evolving the Wagamama and Brunning & Price restaurants. Great move and a turning point for all stakeholders. Onwards and upwards!
That's why I read this board, it's the insight.....
So job done then. Farewell and F and Bs.....They could have simplified the RNS by just saying " What Oasis said"...
New members and traders incoming, gonna be a good day hopefully. GLA
Now reported in FT.
Monday will be interesting
Oasis Management took part of the stake in TRG from Columbia Threadneedle last week lifting its holding from 14.9 to almost 18 per cent.
Separately hoping pubs are nailing it this weekend
I would guess Oasis would not have advance warning of this (as in that would be improper). But some
Extremely strange trading and massive volumes last week inc sell down by biggest shareholder and exit of Chair… lots on all of a sudden
It’s about getting rid of the associated liabilities and debt that has been weighing down the shares for years. You’re left with a materially stronger balance sheet and businesses that make strong free cash with real growth. Oasis and co will be delighted, they’ve been pushing for ages
Not sure how I feel about below from Reuters. We’ll get an RNS re press speculation Monday morning I would think:
The report cited unidentified banking sources as saying a deal would involve TRG paying a multimillion pound dowry to Big Table to take Chiquito's and Frankie and Benny's off its hands.
Only for the dross! Happy days
https://www.thesun.co.uk/money/23883593/restaurant-group-owner-sell-frankie-bennys-chiquito/
Just been announced by Mark Kleinman on Sky News.
Many Thanks to @baroninvestment on twitter who highlighted this a couple of days back because of the very peculiar volumes going through.
As speculation takes hold I think this will climb to >60p . Activists strategy will emerge then the fun will begin.
Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour.
https://www.ft.com/content/cdd70929-c537-4b13-96eb-022cd8b198a7
Columbia Threadneedle, which had been TRG’s biggest shareholder and had backed the management in the face of a revolt at a recent annual general meeting, on Thursday cut its shareholding by 6.5 percentage points to around 10 per cent.