PE-backed Caffè Nero in £275m refinancing

The refinancing comprises a £100m senior debt package, a £150m mezzanine facility and a £25m capex facility.

Senior debt was provided by a syndicate including Santander, Rabobank, M&G Investments, HSBC and Lloyds, while the mezzanine funding was supplied by Partners Group, Avenue Capital and Alcentra. Partners Group acted as mandated lead arranger for the mezzanine facility.

Investment firm M&G – the only non-bank lender contributing senior debt to the refinancing – supplied £30m in senior debt via its M&G UK Companies Financing Fund 2. The £500m direct lending vehicle provides debt facilities for UK mid-market businesses, typically lending £10-50m.

M&G's commitment to Caffè Nero will be repayable after five years, the investment firm stated.

The refinancing will allow Caffè Nero to seek expansion into new international locations, as the new facilities will lower the company's overall average weighted cost of capital, it stated. The Italian-style coffee chain will also expand across its main market, the UK, and will look into new areas of commerce such as an "at home" coffee and products range.

Previous investments & financing
In January 2011, Hutton Collins led a £189m refinancing for Caffè Nero alongside Goldman Sachs European Special Situations Group and Bayside Capital. Via its €600m Capital Partners III fund, Hutton Collins arranged £99m in mezzanine debt and PIK financing, as well as contributing equity as part of the deal.

A senior debt package of £90m was also supplied for the 2011 refinancing by a syndicate of lenders. The syndicate was led by Lloyds with support from Carlyle, Rabobank and Co-op Bank, according to unquote" data.

Prior to the refinancing in 2011, Caffè Nero was taken private by its founder Gerry Ford with support from Paladin Associates in December 2006. The £225m deal saw Paladin and Saratoga Group hold a 43% stake in the business, according to unquote" data.

Caffè Nero had listed on the London Stock Exchange in 2001. The company listed its stock at 50p per share, which gave it a market cap of £33.7m at the time.

Paladin had already invested in Caffè Nero prior to the company's flotation in 2001 and the take-private deal of 2006, according to unquote" data. In June 1997, Paladin supplied approximately £1.1m in equity in exchange for a 75% stake in the business. BancBoston Capital provided £2.5m in senior and mezzanine debt for the deal.

Company
Founded in 1997 and headquartered in London, Caffè Nero operates 600 coffee shops across five countries, namely the UK, Poland, Cyprus, Turkey and the United Arab Emirates. The company, which employs 4,500 staff, is believed to have generated turnover of £204m in the year ending March 2013, as well as a pre-tax profit of £21.1m.

People
Gerry Ford is the chairman and founder of Caffè Nero.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Restructuring
• UK / Ireland
• Consumer
• United Kingdom
• Hutton Collins
• Goldman Sachs
• Lloyds
• Carlyle Group
• Rabobank
• Santander
• HSBC
• Partners Group
• Refinancing