Bistrot Pierre sets target date for Covid-19 recovery

Private equity-backed Bistrot Pierre is expecting to return to pre-Covid levels of profitability by 2024 and open a new site every year from 2023, according to a new document. The value of the pre-pack deal to buy the restaurant chain out of administration last month has also been published for the first time.

The Nottingham-headquartered company was sold in July in a pre-pack deal to Bistrot Pierre 1994 Ltd, preserving 682 jobs. However, 123 redundancies were made and six of its restaurants were closed.

The business was founded by John Whitehead and his school friend Robert Beacham in Nottingham in 1994 and received the backing of mid-market private equity firm, Livingbridge.

A new document filed with Companies House by KPMG has revealed that the total consideration for the pre-pack deal was £7.48m. KPMG added it is unlikely there will be a dividend to preferential creditors and it is not expected to be sufficient funds to enable a distribution to unsecured creditors who were owned about £4m.

When administrators were appointed, the company had a turnover of about £34.7m and employed a total of 806 people.

NatWest was owed about £13.7m when KMPG was brought in while the company owed about £11m in intercompany loans. The bank was given £7m when the administrators were hired.

As a result of lost trading during the Covid-19 lockdown, Bistrot Pierre was forecasting a cash funding requirement of £1.7m to £3m from July 2020 in order to reopen its 25 restaurants and continue trading on a solvent basis.

Bistrot Pierre chairman John Derkach said: "Severe liquidity issues caused by the Covid-19 closure encouraged OldCo to seek a CBIL from the company's bank, NatWest.

"Terms for the proposed loan could not be agreed because of the high level of existing borrowing.

"Given the risk of insolvency, the company implemented an accelerated, independent M&A process which demonstrated that the NewCo offer represented the best value for all stakeholders and offered the best prospect of salvaging the business and saving jobs.

"This now has the potential to be a good business. Debt will now be £7m rather than £13.75m. The remaining 19 sites generate average sales (pre-Covid-19) of £27,000 a week and will be profitable when sales return to normal, sometime in 2021.

"The company's business case is very prudent, focusing on recovery in 2020/2021, consolidation in 2022 and limited expansion thereafter (one new site per year from 2023).

"We assume that restaurants will reopen at barely 50 per cent of prior year sales, that sales will grow slowly throughout the autumn and winter, and that the new investors will need to fund the business until it returns to pre-Covid levels of profitability in June 2024.

"A more aggressive down-side case, requiring careful cash management (but in which the business still remains viable) has been evaluated by independent consultants Buff and Phelps, to give added confidence in the company's future prospects.

"There is much more work to be done, but the write off of £6.5m of debt and 31m of previous investment creates the conditions in which Bistrot Pierre can be successful in the future."

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