Muzinich seizes control of five pubs from Jon Adgemis

Around 100 to 150 staff are affected by the decision, which leaves New York financiers in control of five pub venues.

Pub baron Jon Adgemis has lost control of five pub venues. Picture: NCA NewsWire / David Swift

Sydney pub baron Jon Adgemis has lost control of five pub venues, with American lenders Muzinich appointing administrators over a chunk of his Public Hospitality Group.

BDO administrators Duncan Clubb and Andrew Sallway have taken charge of several operating entities tied to Mr Adgemis’ Sydney pub holdings.

At the same time FTI Consulting senior managing director Vaughan Strawbridge has been appointed receiver over the property assets, covering 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 Balmain.

The appointment was made late on Friday, with staff at Public Hospitality told on Monday.

In a note distributed to suppliers and staff, administrators said they intended to continue trading the businesses and were working to minimise the impact of any ­appointment.

Suppliers were told to close all existing accounts in the names of companies and open new accounts for new debts.

 

Public Hospitality, a group of about 26 venues across Sydney, Melbourne and regional NSW, has struggled in recent months with a steep debt load and rising costs.

The move to hand the pubs to administrators comes after lenders Archibald Capital failed to strike a deal with Muzinich, which holds $100m in debts over the pubs.

Several other venues Public Hospitality manages or has invested in are not under control of administrators.

This includes Noah’s Backpackers in Bondi, Claridge House in Darlinghurst, a hotel on Bayswater Road, the Empire Hotel in Annandale, the Town Hall in Balmain and the Lady Hampshire in Camperdown.

In addition, Mr Adgemis’ holdings in Melbourne, the Clifton in Clifton Hill, Vine in Collingwood, and the Saint in St Kilda, as well as the Beach House in East Ballina remain under control.

The move by Muzinich to seize the Sydney venues leaves the New York financiers in control of the pubs, with upwards of 100 to 150 staff affected by the change.

Sources close to the deal said the relationship between Muzinich and Mr Adgemis had broken down in recent days as the New York lenders pushed for new terms on its debts across the pub assets.

Muzinich, which has made a name for itself in the American private credit markets, had scooped up the debt in Public Hospitality after buying loans refinanced by Deutsche Bank as part of a $400m rescue plan.

 

Muzinich’s exposure to Public Hospitality represents almost a quarter of the group’s Asia-Pacific fund.

Sources indicated Muzinich had sought to deleverage its debt position across Public Hospitality prior to the blow-up between the two groups, delaying additional financing intended to meet cash needs of the embattled pub and hotel business.

The manoeuvre on Monday is now likely to lead to Muzinich dumping the pubs on the market, already tested by several transactions including lately the Tea Garden Hotel in Bondi Junction and the Lord Nelson Brewery Hotel in the Rocks.

Archibald Capital is expected to make a play for some of the assets, having earlier attempted to buy Muzinich out of the pubs in a deal which offered the lender around 92c in the dollar for their debt exposure.

However, this deal is understood to have included Muzinich’s penalty interest and fees.

Ben Madsen’s Archibald Capital has already scooped up several property assets which have fallen out of Public Hospitality, including a shopfront in Erskineville and the Rose, Shamrock & Thistle hotel in Paddington. Archibald Capital is also scoping out a deal which could see it snap up Public Hopitality’s Melbourne assets.

The upset comes despite weeks of negotiations from Mr Adgemis’s side, with former NAB banker Andrew Haggar closely involved in the refinancing.

Mr Haggar has been involved in the Sydney dining scene, including the launch of Bar Copains in Surry Hills.

The collapse of Muzinich’s support comes just months after culmination of the refinancing deal in May. Mr Adgemis had been seeking to secure a roll-up of an almost $500m debt stack across the string of pubs and hotels.

A mooted deal with private equity players Bain Capital fell over after the American firm’s team demanded Mr Adgemis cough up a significant upfront cash contribution.

This came after a proposed public listing of the pub group.

Mr Adgemis was contacted for comment.

Originally published as Muzinich seizes control of five pubs from Jon Adgemis