Credit crunch Ramsay finds a new F-word – his finances

GORDON Ramsay was embroiled in a new controversy yesterday as it emerged that his restaurant empire had flouted banking agreements.

The Scottish chef's financial troubles took a new twist as it was revealed his company had breached financial covenants – promises made to lenders to secure a loan.

The firm, Gordon Ramsay Holdings (GRH), has been forced to renegotiate a 10.5 million loan and overdraft facility that was agreed only last May.

Its latest accounts – which cover the year to 31 August, 2007, and have been posted eight months late – reveal that the company's overdraft was previously renegotiated from 4.56 million to 6.13 million.

Despite increasing turnover by 9.1 per cent to 41.59 million and notching up a 3.28 million profit, suppliers are owed almost 5 million, while 1.67 million of corporation tax is also owed.

Ramsay's turnover and profits are expected to be hit during the current financial year due to the impact of the global economic downturn.

Ramsay and Chris Hutcheson, the GRH chief executive who is also his father-in-law, have had to make personal pledges to help the company pay its debts if necessary.

Ramsay hit the headlines earlier this year when it emerged that he had failed to submit his accounts on time for the second year in a row.

He was also forced to deny that his business had been crippled by the credit crunch and rebuffed claims that he was saddled with 10 million worth of debt. At the weekend, he admitted that he might have exaggerated his football career with Rangers.

Ramsay, best known for TV shows such as Hell's Kitchen and The F Word, is thought to be the highest-earning chef in the world. Born in Renfrewshire, he is believed to earn up to 15 million from his 11 restaurants, books, TV work, guest appearances and product endorsements.

The chef avoided the fallout from the collapse of the Icelandic banking system by refinancing the 4.2 million his company owed its previous bank, Kaupthing Singer & Friedlander, and setting up a new overdraft and loan facility with Royal Bank of Scotland.

However, this was secured against the present and future assets of the company and came with "personal guarantees" from the directors.

In a note with the accounts, GRH states: "The group has breached some of the financial convenants within the facility and, therefore, the group has commenced renewal negotiations with the bank."

The accounts said the group "has held discussion with its bankers about future borrowing needs and is looking to agree terms in this connection" and that "discussions are progressing positively".

They added: "The directors have a reasonable expectation that the company and group have adequate resources to continue in operational existence for the foreseeable future."

Richard Harden, the co-editor of Harden's Restaurant Guide, said: "These accounts do not reflect what is going on now."

Ramsay pulled out of a restaurant in Prague this year, while two of his London outfits were also put up for sale. He has eateries in New York, Los Angeles and Florida. This week, he was awarded two Michelin stars for a restaurant in Versailles, France.

best bib and tucker, pages 44&45