ATO intervenes in bid to rescue Adgemis pubs group

The latest intervention by the Australian Taxation Office in Jon Adgemis’s $500m debt deal risks upsetting the Sydney pub baron’s attempts to rescue his empire.

Jon Adgemis, right, at his Oxford House venture in Sydney’s Paddington with his group’s hospitality chief, Peter Crinis. Picture: NCA NewsWire / David Swift

The latest intervention by the Australian Taxation Office in Jon Adgemis’s $500m debt deal risks upsetting the Sydney pub baron’s attempts to secure sign-off from lenders just days out from the deal being closed.

An ATO spokeswoman said the agency “cannot comment on the tax affairs of any individual or entity due to our obligations of confidentiality under the law”.

But sources close to the tax ­office said its visit to Mr Adgemis’s Public Hospitality Group was a rare outing for the ATO, coming after a deadline to provide documents expired.

The ATO declined to comment on the reasons for its visit.

A spokesman for Public, Mr Adgemis’s sprawling hospitality business, said the ATO’s visit came after the pub baron missed an earlier deadline from the tax office to provide documents.

These documents were in relation to Public’s tax obligations.

“There was no search warrant executed, no AFP present, and no documents were allowed to be taken offsite,” a Public spokesman said.

“ATO staff were freely allowed into the property and were facilitated to complete their visit. However, Public did have the right to refuse entry, which they did not invoke.”

Public is currently on a payment plan with the ATO, which previously lodged a $10.7m default notice against the pub group before withdrawing the lodgement on May 2.

“Public regrets missing the ATO deadline. Public continues to work constructively with the ATO and as previously stated, has entered into a payment plan,” a spokesman said.

“Public is finalising a debt deal that will seek to satisfy creditors and suppliers, as well as guarantee the jobs of some 400 Public employees.”

The ATO is also understood to be concerned over superannuation payments by the former KPMG dealmaker’s pubs group, which has struggled with juggling costs and payments to suppliers and staff.

Sources close to the ATO said the tax office only rarely engaged in “access visits”, and they were often use by the tax office amid concerns over preservation of documents or in the event of suspected fraud.

The Australian is not suggesting any wrongdoing, only that the ATO visited Public.

Public’s cashflow crunch comes after interest costs on Mr Adgemis’s pubs group spiked, as consumers pulled back from spending on the network of pubs and hotels.

The ATO’s visit comes amid concerns over the viability of Mr Adgemis’s pubs group, with the pub baron looking to nail down a $500m debt deal.

Mr Adgemis is also seeking to finalise the rebuilds of at least six venues, which are being renovated, with interest costs on the non-performing assets a key concern for the pub baron.

A new debt deal, backed by Mr Adgemis’s two biggest lenders, Deutsche Bank and private credit provider Gemi Investments, is nearly finalised, with the intervention by the ATO at risk of upsetting the careful balance struck by the former KPMG dealmaker.

Public is paying almost 12 per cent on debts across the group, with a mezzanine loan component charging up to 18 per cent interest.

Some lenders have moved to peel off assets, with Adelaide-based lender Angas Securities swooping on a $25m block on Bondi’s beachfront in late April and Millbrook taking control of the Manor House pub on Sydney’s Oxford St.

Both properties were put up for sale in recent days, but were passed in after lenders were unable to secure enough interest.

Manor House is understood to have been passed in after an $8m vendor bid, with Millbrook looking to line up enough cash to clear its $15m loan on the property.

Originally published as ATO intervenes in bid to rescue Adgemis pubs group