Aspiring hotelier Jon Adgemis has reportedly finally locked in the $400 million refinancing to save Public Hospitality Group, as lenders mandate management and a Masterchef joins the project.
According to sources in finance, Deutsche Bank and other lenders have executed a refinancing deal on around two-dozen assets in the Public (PHG) portfolio.
Deutsche was attempting to buy PHG senior debt from major lender Gemi Investments – at a discount – and has recently taken positions in New York-based private group Muzinich & Co, which had become a funder to core PHG assets in June. Archibald Capital, and Gemi minority shareholder Epstein, were trying to maintain their positions and block other lenders.
The German multi-national had reportedly penned a refinance deal with Public in May, stepping in after lengthy talks with Bain Capital fell over. The latest agreement, primarily with Deutsche and Gemi, was inked this week through Archibald, and Adgemis sees it as a turning point.
“This transaction underscores the confidence that our financial partners have in both our real estate assets and our long-term vision for the business,” said Adgemis, PHG’s executive chairman and former dealmaker for KPMG.
“The strengthened financial foundation will allow us to accelerate our strategic initiatives, enhance our properties, and further elevate our exceptional property portfolio.”
However, it’s said the investment banker will no longer have an operational role in PHG, with a new management team to be announced, and will instead focus his attention on progressing the largely unfinished works on pubs in the collection. The fresh funds will facilitate “significant property improvements” to several partially renovated sites.
Adgemis clawed together a collection of commercial properties across Sydney and in Melbourne, amassing debt as interest rates were about to spike, leading to bridging and mezzanine finance wanting as much as 18 per cent interest.
Valuations were predicated and debt sold to investors based on post-renovation elevated trading, despite the absence of trading history expected for an accurate valuation.
As the lack of cashflow began to catch up with obligations, nervous lenders began trying to sell off secured properties, seeing the Empire in Annandale briefly listed then withdrawn, and administrator sales of the Rose and Kurrajong hotels, then El Primo Sanchez in Darlinghurst.
Down the chain, both staff and suppliers were being left short-changed, and the Australian Taxation Office was asking questions in May.
But back in the black from a conditional cash injection, expected to bring some much-needed stability to the group, Adgemis has offered that both staff and suppliers demonstrated “incredible loyalty and resilience” through the recent turmoil, exemplified by reports at least one venue, unable to secure a gas connection, was getting through using LPG canisters.
Image: Wikipedia
And the PHG kitchens are getting a shake-up with the introduction of celebrity chef George Calombaris, who it’s said was let go from his consultancy role at the iconic Hotel Sorrento on Victoria’s Mornington Peninsula, operated by the Pitt family since 1981.
Calombaris is reportedly moving back to Sydney to take on the role of culinary director with Public, starting September, believed to be bringing some of his team from Hotel Sorrento.
What began as a 12-month contract at Sorrento became more than two years, the former Masterchef judge telling followers on social media “it was awesome and I wish the Pitt family all the success as well as executive chef Beth Candy … love them to bits”.
Since leaving the juggernaut TV series that inspired a million wannabe chefs, Calombaris has found mixed fortunes, his hospitality business Made Establishment collapsed owing $20 million, a year after the group was found to have underpaid staff nearly $8 million, in 2019.
This is not the first time the new culinary director has worked with PHG, previously advising at Alpha – the group’s Greek restaurant within the Hellenic Club of Sydney. This ended when the Club recently terminated the operations agreement with Public.
