THE restaurant chain behind Cafe Rouge and Bella Italia plans to sell its Strada brand as part of a major restructuring by its new owners.
Tragus Group, which was bought by a consortium led by private equity firm Apollo Capital Management from rival Blackstone earlier this year, is understood to have put the 56-store Italian restaurant chain Strada on the block with a £40 million asking price.
The group, which currently runs around 290 outlets and employs 7,000 staff, also plans a debt-for-equity swap to cut its borrowings to £91m from £354m. Finally, it wants to negotiate a company voluntary agreement in a bid to ease its lease terms with landlords and allow it to focus on its Cafe Rouge and Bella Italia restaurants.
As part of the agreement, the group plans to switch the rents on 150 outlets to monthly from quarterly. Another 19 restaurants will see their rent reduced to 60 per cent of current levels for two years and paid monthly. Meanwhile, a further 32 outlets will see their rent reduced to 50 per cent of current levels for three months. Tragus said compromise payments will be made to all landlords asked to cut rents.
Apollo Capital Management added that it will commit £20m of new money to Tragus once a company voluntary agreement is reached with landlords. In total, it plans to invest £110m over five years in Tragus’s two key brands Cafe Rouge and Bella Italia.
Tragus chief executive Steve Richards said the plan was “crucial for reducing the group’s unsustainable level of debt”.
He added: “We hope that creditors will accept our proposals, which will provide us with the necessary financial strength to be able to access new market opportunities and resume growth and development.”