Private credit industry faces reckoning over Jon Adgemis’s $1.42bn debt mountain
The full list of which secretive Sydney and Melbourne private lenders were tapped to fund Jon Adgemis’ empire to the tune of over $680m has been revealed, as they stand to lose 99 per cent of their loans.
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Private credit lenders face crippling losses from Sydney pub baron Jon Adgemis’ $1.5bn debt disaster.
A report published by Mr Adgemis’ bankruptcy trustees reveals creditors are likely to see just 0.17 of a cent in the dollar in a rescue plan proposed by the one-time KPMG deal-maker.
That’s compared to an expected nil return in the event Mr Adgemis is bankrupted. Creditors meet next week to vote on his offer.
Sources close to the strife described the $1.5bn headline figure behind the enormous debt pile assembled to bankroll the purchase of 22 pubs and hotels across Sydney and Melbourne as a worst-case scenario liability.
It reflects the many personal guarantees extended by Mr Adgemis, and would be lower in the event some of his remaining pubs are sold.
Mr Adgemis has $9m in assets, plus $545,000 in luxury cars: a 2015 Land Rover Range Rover, plus two financed cars, a 2021 Mercedes-Benz G63 AMG, and a 2022 Land Rover Range Rover. That means he is $1.42bn under water.
Mr Adgemis’ bankruptcy report revealed the many lenders tapped to fund his empire are
private lenders operating outside of the banking sector.
Reach Alternative Investments partner Jonathan Ng said trustees had a fiduciary duty to mark down the loans after Mr Adgemis’ 0.17 of a cent offer.
“You should be marking it down immediately once you expect that, but in the wholesale market there are other things that go on,” he said.
At its peak Mr Adgemis’ Public Hospitality Group employed hundreds of staff and pursued major renovations to build a collection of up-market venues in the same vein as Justin Hemmes’ Merivale.
One lender told The Australian they were shocked to learn the size of Mr Adgemis’ debt burden, noting they had repeatedly attempted to reach the one-time pub baron without success.
People close to Mr Adgemis’ business are hopeful a sale of the Empire pub in Annadale will be closed in the coming days, after being put on the market in April last year.
Mr Adgemis picked up the pub for about $20m in 2021. But the building was pulled from the market in May amid squabbling with lenders over the nearly $38m debt attached.
Mr Adgemis’ lenders and backers include several high profile names.
These include Melbourne lender Belgravia, run by former Hawthorn football club chair Geoff Lord, which claims it is owed as much as $28m.
Private lender Byblos has an $8.5m debt.
Sydney lender Archibald Capital, on the hook for nearly $18m, had offered to bail out Mr Adgemis’ other creditors through $6.7m in convertible notes issued on several of the venues aimed at refinancing the troubled operations after renovations complete.
The former Bondi hostel, Noah’s Backpackers, is key to salvaging his ailing group with work underway to complete the venue in time for summer 2025.
European banking giant Deutsche Bank has supported Mr Adgemis’ plans, after playing a key role in a major refinancing last year.
The lender has extended a $69.5m convertible note to his business, alongside a further $67.3m mezzanine lending facility.
This is in addition to two syndicate loans worth $234.2m, led by Deutsche Bank.
Australia’s banks have largely escaped Mr Adgemis’ downfall, with only Bank of Queensland declaring $2.5m of debt.
Sydney private lender Gemi Investments disclosed almost $395m in debts to Mr Adgemis’ interests across 23 different guarantees.
Sources close to the bankruptcy noted Gemi’s final figure may be less than this, as several reflected outstanding loans tied to older Adgemis projects.
Gemi, run by Justin Epstein, Michael Cooper and George Fleming, is heavily exposed to Mr Adgemis’ fate across its $800m loan book.
David Lyall’s Millbrook Group is chasing $54.5m, despite several attempts to sell pubs the private lender had backed.
Millbrook had funded Mr Adgemis’ acquisition of the Manor House pub in Sydney’s Darlinghurst.
New York lender Mizunich claimed $126m, having backed Deutsche Bank’s earlier refinancing.
The lender seized control of five of Mr Adgemis’ pubs earlier last year, triggering the insolvency of a key pillar of the enlarged group.
Sydney private lender Yorkway faces nearly $136m in debts across five different exposures.
Yorkway was also tied up in the collapse of Michael Gu and his iProsperity business, which saw investors allegedly defrauded of over $350m.
Angas Securities reports nearly $18.5m in debts against Mr Adgemis, with the group’s court case against the pub baron over a building in Bondi on ice pending his bankruptcy rescue attempt.
The report also notes nearly $21.5m owed by Mr Adgemis to his mother Rose Adgemis.
Lender La Trobe Financial recently foreclosed on Mr Adgemis and his mother’s Rose Bay investment property.
Mr Adgemis has revealed a family member has offered to bolster his bankruptcy return with a $3m contribution, in a bid to secure backing from lenders.
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Originally published as Private credit industry faces reckoning over Jon Adgemis’s $1.42bn debt mountain
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