Anglo to take control of hundreds of pubs in the UK
Nationalised lender Anglo Irish Bank is set to control about 200 pubs in the UK after one of its biggest borrowers in the British pub trade went into administration.
London Town Plc, which delisted from the AIM market last month, has been placed in administration after failing to deal with breaches of its loan agreements. It either owns, manages or operates 350 pubs.
PricewaterhouseCoopers (PWC) will now divide the company up and Anglo Irish is the lead creditor. It has been funding London Town Plc for several years and holds security over 200 pubs. They will continue to trade for the time being, but ultimately PWC are likely to seek a buyer. The other pubs are leased and are expected to return to their original owners.
PWC said over the weekend that London Town had experienced "difficult trading conditions'' and had been unable to meet its debt covenants and other obligations.
London Town's official bankers are Anglo Irish Bank and the bank funded a major acquisition of pubs by London Town four years ago. That debt facility came to £72.2m (e81.9m), based on a loan-to-value of 77pc. That agreement also granted Anglo charges over deposit accounts held by the company. The margin on the loan was 1.65pc above Libor.
The Anglo business in Britain has been shrinking over the last two years, along with its loan book in the US and Ireland.
The bank will shortly announce its financial results for 2009, which are expected to show large-scale impairments and a very large after-tax loss.
The company shored up its capital position last year when it took €4bn of funding from the State.