United Kingdom: Heineken’s purchase of Gobe Pub Co’s debt - review

Heineken’s purchase of a big stake in the debt of Britain’s Globe Pub Co gives the Dutch brewer pole position in any future restructuring of the owner of a 425-strong chain across Britain, Reuters communicated on June, 4.

The brewer acquired 49 percent of the debt of Globe Pub, a struggling outpost of Robert Tchenguiz's property empire. The move came after the group breached covenants on its loans in April, throwing its future into doubt.

The opportunistic debt deals give Heineken a seat at the table in any restructuring and could position it to take control of the business, said one source close to the situation.

Heineken owns Globe Pub debt with a face value of 239 million pounds ($397 million), holding almost 86 percent of the A1 tranche of bonds. It has not disclosed the price it paid.

Heineken's debt purchases also prevent it from being forced to provide Globe Pub with free beer.

When Heineken bought the UK operations of Scottish & Newcastle in 2008, the brewer was locked into an unusual supply and management contract with Globe, in which it would be paid for beer only after payments to banks and bondholders.

Given Globe Pub's financial difficulties, this meant Heineken could have been forced by bondholders to provide Globe with free beer for more than 20 years, Reuters cited an undisclosed source.

However, Heineken's ambitions for Globe Pub are likely to range further than protecting a beer deal.

"One of the largest beer companies in the world doesn't care about supply contracts," said a second source close to the situation. "The restructuring is Heineken's agenda."

05 June, 2009