Britain's largest pub operator is exploring the sale of more than 1,000 of its premier venues as it battles with billions of pounds of debt.
The deal could raise up to £1billion, as the company seeks to reduce its debt burden exceeding £3billion.
Senior executives at Stonegate Group have held talks with potential advisers about options for nearly a quarter of the company’s 4,300 pubs, according to industry sources.
Stonegate, the owner of Slug & Lettuce and Be At One, made more than £1.7billion last year but still has debts above £3billion as of September 20 2024, mainly from its 2019 takeover of rival Ei.
The 1,034 pubs under review are known internally as the “platinum” collection and are regarded as some of the most valuable in the estate.
Industry figures say the sites could be worth up to £1billion. These freehold venues, located across England and Wales, were separated into their own business unit following a £638million deal with private equity firm Apollo.
This structure allows Stonegate to sell the pubs in parts without affecting the rest of the business.
The move comes as a non-call period on Apollo’s loan ends in January, meaning the pubs can finally be sold or refinanced.
A similar sale attempt in 2023 failed, and executives are now weighing up selling the pubs in batches rather than as one portfolio.
One industry source said the structure means they can now "sell off chunks of that business without it damaging the rest of [it]".
The British Beer and Pub Association has already warned more than 2,000 pubs could close permanently in 2026 | PAStonegate’s financial pressures intensified after the £3billion Ei merger, which made it Britain’s biggest pub landlord just before Covid forced closures across the country.
Finance costs reached £455million in the year to September 2024, and rising interest rates have hit heavily leveraged pub companies hard. The sector has also faced higher labour costs following recent increases to employers’ national insurance and the minimum wage.
Fitch downgraded Stonegate to CCC+ in August, warning of default risks.
The platinum pubs were not included in the rating because of their separate structure.
One industry source said the structure means they can now "sell off chunks of that business without it damaging the rest of [it]
| GETTYThese premium venues currently generate about £90million in earnings before interest, tax, amortisation and depreciation. Stonegate reported a £214million loss in 2024, adding urgency to the planned sell-off.
Chief executive David McDowall, who joined from BrewDog in 2023, has launched a transformation programme aimed at returning the business to profit.
A key part of the strategy is converting hundreds of directly operated pubs into tenanted and leased venues run by independent publicans. The shift brings an average profit boost of around £110,000 per pub and reduces exposure to rising labour costs.
The restructuring forms part of wider stabilisation plans under owner TDR Capital,
| GETTYMr McDowall has said the strategy is "building pubs that are more resilient, community-driven and adaptable to evolving guest habits".
The restructuring forms part of wider stabilisation plans under owner TDR Capital, the private equity firm that created Stonegate in 2010 and later became majority owner of Asda in a £6.8billion deal.
Stonegate declined to comment on the potential sale.
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