Enterprise sell-off on track
Enterprise Inns' plan to generate £110m by selling off 500 non-core pubs is on track, the company said this morning (4 August 2011). So far it has sold 335 pubs with net proceeds of £69m in the 44 weeks to 30 July 2011.
Earlier this year the Solihull company announced it had "largely completed" a sale and leaseback programme, selling 176 pubs for £247m with an average rental yield of 6.5 per cent.
The proceeds from the disposal are being used for capital investment and to cut its debt. Enterprise has invested £50m and expects this to reach £60m by the end of its financial year.
In addition, it expects to have about £450m net debt at the end of the financial year and it has prepaid £55m of its unique floating rate notes, which it said is £80m ahead of schedule.
Enterprise said "exceptional weather and two bank holidays" boosted its income per pub by 1 per cent in the 18 weeks to 30 July.
"We believe that the current levels of borrowing and amortisation are sustainable even if, as we believe, the UK economy and consumer spending remain subdued for a considerable period of time," said Enterprise.
"However, we continue to have the ability to reduce bank borrowing substantially should that be necessary."
The business said its strategy to dispose of non-core pubs and focus on food provision means food sales now account for 25 per cent of its turnover.
"Our strategy remains clear: to stabilise the business and then to build EBITDA, firstly on a like for like basis per pub and then, as our accelerated disposal programme comes to an end, by growing the absolute level of EBITDA," said Enterprise.
