Unigate postpones US flotation: Restaurant chain proceeds would have been used to reduce debt from

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The Independent Online
UNIGATE has postponed the planned flotation of its American chain of restaurants. The milk and food company had hoped to reduce its debt burden with pounds 150m of proceeds.

Unigate said that poor trading conditions - exacerbated by inclement weather in March - forced the delay.

In addition, uncertainty about the strength of economic recovery in North America has dampened stock market sentiment, squeezing the amount the flotation would have raised.

Unigate's wish to float the Black Eyed Pea Restaurants - which combine the fast food formula with healthy eating - followed an acquisition spree earlier in the year.

The company spent about pounds 120m on the milk and juice company Clifford Foods, the Co-op's milk production operation and on Glass Glover, a food distribution company. The spree was paid for in cash, bringing Unigate's proportion of debt to net assets to about 60 to 65 per cent. A successful flotation of Black Eyed Pea would have cut the gearing percentage by 15 points.

Although the postponement is a disappointment it is unlikely Unigate will feel it necessary to find another way of reducing debt. Yesterday it ruled out a rights issue.

The company has a strategy of hiving off businesses that are not in dairy or food distribution. The 211-strong chain of US restaurants - which also includes Mexican-style Taco Bueno outlets - is the largest remaining non-core operation in Unigate.

Ross Buckley, Unigate's chief executive, said yesterday: 'Our US restaurant business is a successful and well managed operation. It remains our intention to complete (the flotation) of the business at an appropriate time.'

Unigate shares fell 12p yesterday to close at 353p. When the flotation plan was announced the shares were at a 12- month high of 374p, having risen from a low of 193p in mid-September.

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