Concerns over Stonegate pub chain needing to clear £2bn debt

Stonegate has more than 4,000 sites across the UK and said in newly filed accounts that there was a “material uncertainty” around its ability to continue as a going concern.

In its latest annual report, bosses said: “Whilst there is a plan in place for refinancing this debt, as at the date of signing the financial statements there is a risk that it exists over the completion of this exercise.”

If the company is unable to do this, it said it “may be unable to realise its assets and discharge its liabilities in the normal course of business”, The Telegraph reports.

Stonegate owns various pub chains around the UK (Image: Canva)

Stonegate runs several brands including Slug & Lettuce, Popworld, Be At One as well as the Craft Union pub brand.

Stonegate racks up huge debts in last financial year

Stonegate’s total debts were at more than £3bn at the end of its financial year, which was partially to do with the buyout of rival pub chain Ei Group in 2019.

The deal, which turned Stonegate into Britain’s largest pub operator, valued Ei at £3bn, of which £1.7bn was debt.

The Telegraph added: "Soaring interest rates in the wake of the pandemic have heaped pressure on businesses with large amounts of borrowings as the cost of financing debts jumped."

Despite this, David McDowall, chief executive of Stonegate, kept a positive outlook when speaking to the Money Blog at Sky News.

He explained: " "I am really pleased with the performance of the business in 2023, which included a sector-leading Christmas trading period. 

"We have delivered a rise in revenue and a significant increase in profitability. Our all-round performance exemplifies the strength and depth of the Stonegate estate, with our outstanding Craft Union and L&T divisions continuing to lead the way.

"This is testament to the hard work of our people and partners, but also to the success of our ongoing initiatives to increase profitability across our portfolio of brands and venue formats.

"Our performance gives me real confidence in the future and excitement in seeing our strategy come to fruition. Notably our asset optimisation plan which makes sure we have the right pub in the right location, further profit improvement initiatives, and above all our efforts to continue to support the Great British pub.

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"With a summer of sport on the horizon, and the Euro’s and T20 World Cup fast approaching, we are looking forward to building on this momentum in the months ahead.

"We have been very clear that we continue to work towards achieving our long-term balance sheet goals, with the successful refinancing of a portion of our estate in December marking a significant strategic step towards this." 

He added: "We would also like to assure our valued employees and partners that venues are not at risk as a result of this process.”

The warning over Stonegate’s debts comes after the company signed a deal in December to refinance a portfolio of around 1,000 pubs for £638m.