Pizza Express will close 73 restaurants and put 1,100 people out of work, after the people and companies that it owes money voted to approve its restructuring plan. More than 89 percent of those people and companies, its creditors, voted in favour of the deal, putting at least a temporary end to months of speculation about the beloved pizza chain’s future, according to Propel.
The terms of the deal are as previously reported in August, designed to reduce the chain’s catastrophic debt:
Of its £1.1 billion debt, £735 million is external; the other ~£450 million is loans from current owner Hony Capital. That external debt is being reduced to £319 million, in a debt-for-equity deal. This means people known as “bondholders,” who are owed money by Pizza Express in the form of “secured notes,” give up that promise of money for equity — shares. It’s based on the sort-of-promise-but-investment-is-risky that less debt makes for a more stable company which will in turn provide a more consistent return on investment to the former bondholders. This in turn buys Pizza Express time, as it was previously due to repay over £450 million to those bondholders in 2021.
Pizza Express is also putting itself up for sale. The company will be transferred into the power of those bondholders if no bid from a third-party exceeds the value of their combined shareholding. Current owner Hony Capital will retain Pizza Express’ Chinese restaurant interests, but it has lost hundreds of millions as part of the deal.
Also as previously reported — while the chain cites the impact of the pandemic, its longterm problems, as with so many of the casual dining chains that have shed restaurants like snakes shed skin during the crisis, stem from a bubble of private equity debt and over-saturation. The great irony of the novel coronavirus pandemic may be that in forcing its restaurants to close, it actually saved it from itself — for now.