The end for Famous Brands and GBK


The end for Famous Brands and GBK

Published Date: 2020-10-15 | Source: Stephen Gunnion | Author: Stephen Gunnion

The end for Famous Brands and GBK

Sky News reported that a British businessman reached a deal to buy the upmarket burger chain through a pre-pack administration.

Famous Brands' Gourmet Burger Kitchen (GBK) in the UK has entered into administration after Covid-19 hampered the upmarket burger chain's recovery plan. The restaurant group recently fully impaired its investment in GBK.

In April, Famous Brands said it wouldn't provide any more financial support to GBK as it struggled to make ends meet as weak economic conditions in the UK, exacerbated by Brexit and Covid-19, resulted in fewer visitors to its restaurants. Companies enter administration when they are unable to pay their debts, with management replaced by an insolvency practitioner tasked with either saving the business or getting the best results possible.

The UK's Sky News reported yesterday that British entrepreneur Ranjit Boparan had reached a deal to buy GBK through a pre-pack administration, an insolvency procedure where a company arranges a deal to sell its assets to a buyer before appointing administrators to facilitate the sale. Sky said the deal with Boparan was expected to save roughly 650 jobs and 35 of GBK's restaurants. Prior to the lockdown, GBK operated 62 restaurant.

Last month, Famous Brands impaired its investment in GBK by a further R1.3 billion, writing of its investment in full. it had already impaired its investment in GBK twice: by R400 million in 2018 and a further R874 million in its 2019 financial year. It bought GBK for about R2.3 billion in 2016 to further diversify its earnings geographically. GBK entered a Company Voluntary Arrangement (CVA) in late 2018, under which it closed most of its unprofitable restaurants and refinanced its debt.

Famous Brands' shares closed 1c higher at R48 yesterday.

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