Deal looms for Adgemis pubs as sales near for more venues
Staff at five Public Hospitality Group venues have been told a deal may be proposed to pay outstanding wages and superannuation, as several sales are set to hit the market.
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Sydney pub baron Jon Adgemis is preparing to cut a deal to pay staff and suppliers across a string of pubs and hotels seized by lenders, amid moves by other backers to pick up the distressed assets in a fire sale.
Sources confirmed representatives for Mr Adgemis floated a proposal at a creditors meeting on Wednesday to prepare a deed of company arrangement to bolster returns for staff and suppliers.
This deal would see almost $5.5m set aside to pay staff and suppliers at five venues after they were seized by American lenders Muzinich, who appointed administrators over the group last week.
Administrators over the five pubs are assessing claims from creditors and suppliers, with the bill expected to exceed $20m.
The potential DOCA from Mr Adgemis’s camp may see the 100-150 affected staff handed 100c in the dollar on their superannuation and wage claims, but suppliers are expected to see a lesser return.
Muzinich is preparing to offload the five pubs seized from Mr Adgemis last week, with sources indicating the lender is expected to put the properties on the market in coming weeks.
The five venues, The Strand Hotel in Darlinghurst, Camelia Grove Hotel in Alexandria, Norfolk Hotel in Redfern, Oxford House in Darlinghurst, and a site under development – the Exchange Hotel in Darlinghurst– are expected to be sold as a group.
However, property industry sources said they expected Muzinich, which holds about $100m in debts across the pubs, to take a haircut on any sale.
“The feedback wasn’t good,” one industry source said.
Meanwhile, the Sydney pub market is prepares to absorb the remains of the Virtical business, which splashed almost $125m on new venues in a recent expansion.
Virtical’s The Republic Hotel and Hotel Australasia are currently in administration, while Kinselas and the Courthouse Hotel are also expected to hit the market amid a dispute over their ownership.
Lenders Millbrook Group seized Mr Adgemis’s Manor House in April, but Savills agents have failed to sell the Darlinghurst venue, currently listed for $10.5m.
Mr Adgemis purchased the site in 2022 for $8.25m, but borrowed $12.7m from Millbrook Group for the site, with plans to renovate and reopen the 1850s Georgian-style hotel.
Muzinich reached its position in an almost $400m debt stack across Mr Adgemis’s Public Hospitality after picking up debts in a recent refinancing deal led by Deutsche Bank.
The stake is understood to be among the largest exposures in Muzinich’s Asia-Pacific fund.
Muzinich appointed FTI Consulting over the assets, with BDO administrators taking on the running of the businesses last week. All the pubs continue to trade.
Documents show BDO was handed $150,000 upfront to take on the administration of Mr Adgemis’s venues, noting FTI sounded out the firm over the move on August 23.
BDO reveals FTI Consulting senior managing director Vaughn Strawbridge spoke with BDO again on September 10 about placing the pubs into administration.
The Australian Taxation Office is understood to be taking a keen interest in the administration of the hotel venues, with the tax office among the creditors pool.
The ATO has been running the ruler over Mr Adgemis’ hospitality business for some time, conducing a visit to the Sydney home of the former KPMG deal-maker in May over a tax default notice.
However, the trouble over the five Sydney venues is not expected to affect Mr Adgemis’s other pubs and hotels, including operational sites in Sydney and Melbourne as well as several venues under construction.
Lenders Archibald capital have also moved to pick up assets that have fallen out of the group, amid other disputes with lenders, including the Rose Hotel in Sydney’s Paddington.
Mr Adgemis is also preparing to exchange on the East Ballina Beach House, selling the regional NSW hospitality venue snapped up in 2021 for $7m.
The non-operational venue, currently a construction site, is set to be handed over to a family with significant business interest in Byron Bay.
Originally published as Deal looms for Adgemis pubs as sales near for more venues
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