Jon Adgemis to sell Empire Hotel as pub baron calls for calm

The Public Hospitality Group will offload its Annandale venue as pub baron Jon Adgemis seeks to secure stability for the company.

Jon Adgemis at Oxford House in Paddington with Peter Crinis, who ran the hospitality side of the business. Picture: David Swift

Sydney pub baron Jon Adgemis has put the Empire Hotel in Annandale on the block as the deal-maker looks to secure a restructure for his hospitality and hotel group and backing from suppliers and staff.

Mr Adgemis is looking to offload the Annandale drinking hole as part of efforts to right his group of 22 pubs and hotels, which is facing a cash crunch as spiralling borrowing costs across the near-$700m portfolio, coupled with several ongoing big builds, pinch the company.

The Empire Hotel is slated to go on the auction block in the coming weeks, after Mr Adgemis paid almost $20m for the venue in late 2021, and comes as the pubs market trades hot with almost $70m in deals struck in recent weeks.

The pub is valued at $40m and carries almost $34m in debt.

Mr Adgemis’ Public Hospitality Group has been seeking to strike a $500m debt deal in recent months, which would see the group roll up several different existing loans across the property and operating assets of the company into one major debt package.

This is aimed at bringing down the tempo of debt repayments, with costs hovering at around 12 per cent, and some mezzanine financing topping 18 per cent.

A refinancing deal with Bain Capital fell over last week after the American private equity players walked away from the $500m deal, warning Mr Adgemis had failed to pay more than $2.5m demanded before commencing due diligence.

The Empire Hotel in Annandale.

The sale of the Empire Hotel in Annandale would see Mr Adgemis walk away from the 15th venue he purchased, after Oscars Group divested the pub and hotel operation in 2021.

Mr Adgemis had sought to line up a partnership with hospitality players the Love Tilly Group for the hotel, but the two sides split in late 2023 after a blow up over almost $300,000 in allegedly unpaid wages and fees.

Savills will sell the Empire Hotel, which is mortgaged to three of Mr Adgemis’ major financial backers, Gemi Investments, Millbrook Funds and Archibald Capital.

Lenders to Public are understood to be supportive of Mr Adgemis’ attempts to lock in a new debt deal, with Gemi weighing in to back the former KPMG deal-maker.

However, some lenders are under stress, with Gemi facing down a potential class action from disaffected investors in its mortgage fund.

Mr Adgemis has sought to keep his staff and suppliers onside, amid the media storm surrounding Public.

In a message issued on Wednesday, seen by The Australian, Mr Adgemis told suppliers Public was “working constructively with our lenders to finalise a reset of the group’s external debt facilities”.

“Much of the public commentary is not consistent with the productive way in which we have been progressing discussions in relation to financing,” he said.

“Once we have completed the debt reset, I expect the enhanced stability will help strengthen our relationships with you, our valued suppliers.”

But Mr Adgemis acknowledged “there have been some real challenges for the group at times”.

“In my many conversations over recent days with stakeholders – whether they be suppliers, lenders, partners, and the wonderful people and customers across our assets, I’ve been struck by the overwhelming sentiment of wanting to see this business succeed,” he said.

Originally published as Jon Adgemis to sell Empire Hotel as pub baron calls for calm