At least one of the smaller financiers owed money by Jon Adgemis have placed companies behind two of his Sydney hotels into external administration in what could threaten to derail a major $400m debt restructure for his troubled pub empire.
According to documents filed with the Australian Securities and Investments Commission Register, The Oxford Rose Pty Ltd has been placed in external administration.
The business is linked to The Rose Hotel on Oxford St in Paddington.
Also placed into external administration, according to ASIC, is the entity 106 Swanson Street Pty Ltd, which is behind the Kurrajong Hotel in Erskinville.
It is understood that lenders are owed money in the tens of millions of dollars.
Working as the external administrator on the entities is insolvency and advisory firm Ankura.
It comes after Mr Adgemis has agreed a rescue deal supported by Deutsche Bank for his Public Hospitality Group, comprising 22 pubs and hotels across Sydney and Melbourne after clocking up loans worth about $400m.
Mr Adgemis had worked as a prolific dealmaker at KPMG before building up his hotel operations.
However, they have become overwhelmed by high debt levels, paying almost 12 per cent on debts across the group, with a mezzanine loan component charging up to 18 per cent interest.
Among his lenders are Deutsche Bank, GEMI Investments and Archibald Capital.
As reported by The Australian earlier this month, American private lending operator Muzinich has been positioned to pick up some of the loans.
As part of a restructure negotiated with Deutsche Bank, Mr Adgemis’s loans were set to be consolidated across the group.
Some of the financing was being targeted towards the completion of hotel redevelopments, including that of his Noah’s Backpackers site in Sydney’s Bondi that Mr Adgemis purchased in June 2022 for $68m.
The Kurrajong Hotel has been subject to a rebuild, as has his Vine Hotel in Collingwood and the Town Hall property in Sydney’s Balmain.
Plans have been afoot for the sale of several assets and the spin-off of assets into an equity fund, enabling investors to hold a stake in hospitality and accommodation assets along with Mr Adgemis and lenders like Archibald.
A spin-off of Public Hospitality’s Melbourne assets, which include the St George in St Kilda and Puttanesca Osteria, has also been on the agenda.
Already an apartment building in Bondi, adjacent to Noah’s, and the Manor House pub in Darlinghurst have been pulled out of the group by lenders.
The equity fund’s composition is expected to be finalised by the end of the month.
Initially, Macquarie counted itself a lender to Mr Adgemis, but its debt was sold to Deutsche Bank in January when troubles started to emerge within the portfolio.
The new deal for Mr Adgemis’s group comes after an earlier $500m proposal with lenders Bain Capital fell over in April.
Bain had demanded Mr Adgemis cover a significant upfront cash payment.
Public Hospitality previously touted an ASX-listing, raising a $40m note in early 2022 backed by rich lister Alex Waislitz’s Thorney Investment Group.
The latest development comes as pub groups have faced a challenging few years with closures linked to the global pandemic, rising staff costs and the high interest rate environment dampening consumer demand.
More Coverage
Anglo ready to announce winner of coal mine auction
A decision by Anglo American about its Queensland-based coal assets is believed imminent, a week on from when final bids were due.
KKR seeks to offload Colonial First State stake
KKR is understood to be creating a data room for at least one prospective trade buyer to consider the $3bn-plus wealth management business, Colonial First State.