Debt deal sealed in break-up of Jon Adgemis pub empire

Sydney pub baron Jon Adgemis’ pub group will face a carve-up under a $400m debt deal, which will see the empire of pubs and hotels refinanced by a consortium of lenders.

Jon Adgemis has secured a debt deal for his empire of pubs and hotels. Picture: NCA NewsWire / David Swift

Sydney pub baron Jon Adgemis’ pub group will face a carve-up under a $400m debt deal, which will see the empire of pubs and hotels refinanced by a consortium of lenders.

Sources confirmed Mr Adgemis has inked a $400m deal, which would see a consortium of lenders headed by Deutsche Bank step in and refinance existing debt holders across the Public Hospitality Group.

Deutsche Bank will also immediately transfer cash into the hospitality group to pick up costs and pay debtors and suppliers.

However, approximately eight venues will be spun out of the group in a $70-80m equity fund controlled by Archibald Capital, which Mr Adgemis will hold a stake in.

These venues are unlikely to continue under the Public brand.

A separate fund will also control Public’s former Melbourne pub assets, which will also be jettisoned.

This will see Mr Adgemis left with the remaining 14 or so venues and assets across his hospitality play.

This comes after Mr Adgemis walked away from an earlier proposed $500m debt deal, which would have seen American private equity players Bain Capital step in.

Deutsche Bank’s funding line will guarantee wages and costs across Public as well as debts across the group, which has been under pressure in recent months in the face of ballooning debt costs and a drop in consumer spending.

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

A Japanese hedge fund has also taken an option to pick up Deutsche Bank’s debts.

Lenders signed the deal on Wednesday night, however the final terms are still being thrashed out, including the allocation of assets between lenders, and separate funds.

As part of the rescue plan Mr Adgemis will step back from direct management of Public, with a new managing director of the pubs business to be appointed.

The company may also look to change names.

Noah’s Backpackers at Bondi Beach.

Mr Adgemis, a former KPMG dealmaker, will instead focus on the development of the assets, including the renovation of six or so sites, including the high-profile Noah’s Backpackers in Bondi.

Public has been saddled with high debt costs from the several pubs and hotels under renovation.

Mr Adgemis had originally sought to refinance the group with a deal struck with Bain Capital, however the pub baron walked away after demands were made for a significant upfront cash payment.

The deal comes after months of mounting uncertainty around Mr Adgemis’ property play Public.

The Australian Taxation Office entered the fray last week, seeking information about debts owed by Public.

Lenders have also peeled off several assets from the pub group, including an apartment building in Bondi, controlled by Angas Securities, as well as The Manor House pub in Sydney’s Darlinghurst.

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

Originally published as Debt deal sealed in break-up of Jon Adgemis pub empire