Orchid admits it could breach loan covenants
Pub group Orchid could be forced to hold discussions with its main lender, Lloyds Banking Group, after it admitted it was likely to breach its loan covenants.
The firm, which runs 290 pubs and restaurants nationwide, is set to breach covenants on £42.4m of debt after reporting a pre-tax loss of £17.24m for the year to 1 January 2011 and writing down the value of its estate by £10.9m, according to the Sunday Times.
The paper reported that Lloyds was looking to reduce its exposure to the business and is in talks with other financial institutions, including Deutsche Bank, about selling its loans at a discount.
The directors of Orchid also said they had a "reasonable expectation that sufficient and appropriate loan facilities suitable to the company's and the group's needs will continue to be available for the foreseeable future and that appropriate revised covenants will be set as part of the process".
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By Neil Gerrard
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