JONGLEURS, the comedy club, should be a roaring success. A comedian tells jokes, customers buy lots of drinks and, as the evening progresses, everyone finds the succession of stand-ups even funnier. But for Regent Inns, the company that owns the club chain, it is no laughing matter.
Regent is receiving the equivalent of a slow handclap in the City. The chief executive and the finance director have been drummed out by a mob of angry investors, led by Deutsche Bank. They bought into a share placing at a price well above today’s level of 32½p, valuing the company at £36m. Meanwhile, the group is weighed down with debts of £75m and it has breached covenants.
At this level, no venture capitalist would want to take on the company, which, as well as Jongleurs, owns 50 Walkabout bars. The group is looking for a chief executive to replace Stephen Haupt.
It may still be on course to make £11m for the last financical year but any new director will want to take a cold look at the books, and the prospect of restructuring charges looks very likely.
With debt at this level, it will be very hard to trade out of Regent’s financial difficulties. Competition among high-street boozers is still intense and what the industry needs is a few to go to the wall.
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Regent may manage to cling on, but those holding the shares should be prepared to stick in for a long session. For potential investors, the prospect of enjoying cheap beer is far more appealing.
Cox Insurance
THE Lloyd’s of London motor insurer Cox is not having a nice time of it. First, its merger talks with Highway, a smaller rival, collapsed and last week it reported that interim pre-tax profits have halved.
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If Andrew Fisher, the new chief executive, wants to remain independent, he does not have much room for mistakes. At least two bidders have looked closely at the company. They are Neil Utley, the former chief executive, who is backed by Englefield Capital, and Hasting Direct, which is backed by Barclays Private Equity.
But Fisher may yet join up with his chairman, Peter Owen, and attempt a buyout. Warburg Pincus is thought to be keen to provide backing.
Shares in Cox closed at 68½p, valuing the company at £215m.
Market Mole: Citywire reveals secret City deals
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UNITE GROUP believes the next few years will be an important time for the £260m developer of student accommodation. The star Framlington fund manager Roger Whiteoak hopes so. The Mole spotted that Whiteoak, who is AAA-rated by Citywire, put away 75,000 shares ahead of last week’s interim results, which takes the Throgmorton investment trust’s holding to 710,000 shares.
Whiteoak’s AA-rated colleague Nigel Thomas holds 1m shares in the Framlington UK Select Opportunities unit trust.
Unite has always had an interesting story but ran into problems in 2002, soon after its last round of fundraising.