Lloyds to rescue debt-laden Admiral

Admiral Taverns has confirmed that Lloyds Banking Group is working on a financial restructuring of the struggling pubs group that is thought to involve a £600m debt-for-equity swap.

The deal means Lloyds will in effect take control of Admiral, which it inherited in last year's acquisition of Halifax/Bank of Scotland, although it will stop short of owning a 50 per cent majority stake. Lloyds declined to comment.

As part of the deal, Lloyds is also considering a pre-pack administration of Admiral that will enable the pubs owner to continue trading but with reduced liabilities. The pre-pack deal could be unveiled this week.

Admiral, which had debts of more than £1bn, is the latest pubs operator to hit hard times, following the collapse into administration of the Globe Pub Company, which was subsequently bought by the Heineken brewery last month. Admiral had expanded its estate rapidly by acquiring pubs from rivals such as Punch Taverns to make it the UK's third-biggest pub operator, with more than 3,000 leased and tenanted premises. Lloyds's restructuring of Admiral comes just days after the property developer Kenmore fell into administration; HBOS is reported to have pumped £700m in loans and equity investments into Kenmore.

A spokesman for Admiral said: "Admiral Taverns is pleased to confirm that it is working on a financial restructuring which will provide a stable platform for the business. The plan does not involve any job losses, and it is intended that all payments to suppliers and contractors will continue to be made in the normal course of business."

Lloyds is thought to have already provided for the pubs group's losses.

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