Pret secures balance sheet with £185m capital injection
Pret-a-Manger has secured a capital injection of £185m from its shareholders to help the business navigate through the continued impact of Covid-19, yet directors remain concerned about future trading.
The cash was secured earlier this year, according to the chain's most recent financial results published on Companies House. Meanwhile, the group also amended terms with external lenders, including backstop facilities totalling £150m which were originally obtained in May 2020, which have now been extended to December 2021, with an optional extension of a further six months.
Further waiver of existing covenants has been obtained for the period until September 2022 and no dividends will be paid during the covenant waiver period.
The side-effects of national lockdowns, unpredictability of consumer behaviour and volatility of the global economy are all concerns for the company's board of directors, along with the ability the extend debt facilities beyond 2021. The report stated Pret's management would seek to reduce discretionary spend, delay supplier payments and capital expenditure if any of the company's key concern areas come to fruition.
Pret, which is backed by JAB Holdings, said the cash injection and renegotiation of the backstop financing provides the group with a "reasonable expectation that [it] can continue in operation and meet its liabilities".
The report stated: "The directors of the group have concluded that there are material uncertainties which may cast significant doubt over the group's ability to continue as a going concern."
Pret's chief exec, Pano Christou, said: "The impact of coronavirus on the global retail and hospitality industry at the date of this report has been severe. Social distancing will continue to change consumer habits for some time, and may permanently affect where, when and how customers choose to enjoy Pret's food and drink. Management's priorities remain as the safety of Pret's team members and customers, and protecting the business. It is still too early to know the full impact on the business due to the ongoing uncertainty."
During 2020, the chain underwent a restructure to reduce its costs base, including the closure of 39 Pret and 33 Eat-branded shops in the UK and 22 in the US. It made 3,771 redundancies in the UK and 1,292 in the US at a cost of £15.3m.
Even before the uncertainties of the ongoing Covid-19 crisis, Pret's business reported a hit on its profits. The report covered trading for the 52 weeks to 2 January 2020, during which the loss before tax was £26m, compared to a profit of £48.8m the year prior. Meanwhile, while revenue dipped slightly from £710m in 2018 to £708m for 2019.
Over the course 2019, the company also noted how it had significantly invested in the "biggest operational changes in its history" by introducing full ingredient labelling in UK stores, using new labelling technology and a training programme for over 9,000 team members. Pret said that its labelling changes had been made two years ahead of the October introduction of allergen legislation following the death of Natasha Ednan-Laperouse, who suffered an allergic reaction to a Pret A Manger baguette containing sesame.