Caffè Nero scuppers EG Group takeover hopes with debt refinancing

British coffee shop chain Caffè Nero Group has signed a roughly £330 million, six-year loan refinancing via a lender group of Carlyle, HSBC and Santander. The financing comes with additional facilities of £85 million available for growth opportunities, according to a statement.

Majority ownership of Caffè Nero remains with Gerry Ford, founder and group CEO, alongside his family and friends.

The debt agreement means EG Group is no longer a holder of any of the group's debt, while incumbent lenders Alcentra, Lloyds and Rabobank have also been repaid in full. HSBC and Santander were also previous lenders.

The Issa brothers- and TDR-backed EG Group held roughly £160 million of the company's mezzanine debt acquired from Partners Group, and were aiming to use the position to take control of Nero. A move to challenge Nero's company voluntary arrangement was thrown out by the English high court in September 2021. In all, the new financing reduces the group's debt exposure by roughly 15%, while also providing additional facilities, the statement adds.

Caffè Nero Group operates four brands (Caffe Nero, Coffee #1, Harris + Hole and Aroma) across 1,020 stores in 10 countries. Before COVID-19, the group registered 86 consecutive quarters of positive like-for-like sales growth. In the second half of 2021 — with COVID-19 restrictions lifted — Nero started to return to its normal operating performance, and sales in the first half of its financial year (June-November 2021) were up 61%, with EBITDA for the same period at £29.4 million.

Caffè Nero was founded by Gerry Ford in 1997.