Inntrepreneur set for split

An £800m refinancing and a radical split of Inntrepreneur, the 6,100-strong chain of pubs owned jointly by Courage and Grand Metropolitan, is imminent, according to banking and industry sources.

The announcement, which may be made today, will further reinforce Courage's strategic aim of turning Inntrepreneur into a pub trading company rather than letting it carry on as the property entity it was originally designed to be when it was set-up in the late Eighties.

Grand Met and Courage, which formed Inntrepreneur through their breweries-for-pubs swap deal in 1988, declined to comment on the speculation.

An industry source said Inntrepreneur was to be split into two companies - one for the 4,350 tied pubs that buy beer from Courage, the UK's second-largest brewer, and one for the 1,750 free-of-tie outlets.

The banking source added that the free-of-tie pubs may be sold, either to individual landlords, in blocks or lock, stock and barrel to Morgan Grenfell, the merchant bank, which has already done two such deals with Grand Met and Courage. In November, Morgan Grenfell paid £203m for 320 Chef & Brewer pubs owned by Inntrepreneur but leased to Scottish & Newcastle. The bank was similarly involved a year earlier when Scottish paid £736m for 1,600 pubs from Grand Met.

The bank became involved because the Beer Orders meant that as Scottish already had more than 2,000 pubs it had to sell half of the outlets it bought, or an identical number from its existing estates.

It is understood that the two new Inntrepreneur pub companies will have different managements. The tied pubs have to buy beer from Courage until March 1998, after which the supply contracts will be thrown open to tender to all brewers.

The division of Inntrepreneur will mark another step in Courage's attempts to repair trading bridges with landlords, hundreds of whom have taken legal action over rents.

The most recent move to placate publicans involved stopping levying fines for failure to meet minimum purchase targets for beer bought from Courage. Fines were typically £80 for each barrel short of target.