Tchenguiz pubs default on £275m loans

Robert Tchenguiz's Globe Pub Company has defaulted on its £275 million of loans, leaving the 420-strong chain with an uncertain future.

Tchenguiz could not only lose control of the business but see his entire investment wiped out if he cannot reach agreement with Globe's bondholders in the near future.

The company — managed by Scottish & Newcastle Pub Enterprises — said today that the default would have no impact on publicans or customers.

A spokesman said: "The event of default does not in any way affect the operating business or tenants.

"Although the business is in financial difficulty, that financial difficulty does not have any impact on the operational business, on tenants or customers." Those close to Tchenguiz said he was still trying to work out a deal with Globe's creditors and had not ruled out injecting more cash himself.

Last year his Laurel Pub Company went into administration and he was also forced to sell his 25% stake in Mitchells & Butlers at a heavy loss. Globe breached its banking covenants in its last trading quarter when earnings for the three months to the end of February fell from £6.6 million to £4.1 million. Debt charges were £4.4 million. This meant that over the last two quarters, earnings only covered debt charges 1.08 times, falling below the covenant level of 1.25 times.

Similarly its free cashflow, which is meant to exceed 1.1 times, fell to 1.04 times.

The latest quarterly report also revealed that an offshoot of Globe, Glasshouse TMA which owned nine pubs, went into administration creating a bad debt of £900,000.

Bondholders are now being contacted by their trustee Bank of New York Mellon to discuss the default. If holders of 25% of the bonds agree, they can call in administrators to the business.

But that is likely to be a last resort that bondholders will only take if they cannot reach a compromise with Tchenguiz.

Globe was created four years ago when Tchenguiz paid £345 million for 360 pubs from Spirit.