Wagamama Refinances in Attempt to Lessen Debt Cost Pressures

Wagamama, a Japanese-inspired restaurant chain, has refinanced debts in an effort to lessen the financial burden that added to another year of pre-tax losses.

The 128-site chain is owned by Duke Street Capital, a private equity house. According to documents released last week by Companies House, it was able to refinance its £150m bond, which had an interest rate of 7.87pc, with a £225m issue at only 4.12pc.

The company said that this new bond would be utilized to ­lessen the shareholder debt of the group. This included fixed interest loan notes of £185.9m at the end of its preceding financial year to April 23, several of which are registered on the Channel Islands Stock Exchange and pay out between 10pc and 12pc interest. According to the accounts, all the debt of the company had a term of more than two years but not more than five.

The refinancing arrived after a strong year for the firm in terms of sales, which increased by almost 16pc to £266m.

The management team said that this was because the price of its food remained captivating. This helped operating profits rise to almost a third to £21.9m. However, an increase in interest payments on its loan notes implied that the company suffered a pre-tax loss of £8.19m, although down from a loss of £12m in the same period the year prior.

Pressures are escalating on restaurant chains as costs rise because of increasing business rates, imported food costs, and the national living wage. Rivals Richoux, Tasty, Restaurant Group, and Comptoir have all warned on trading, as has Fulham Shore, the owner of Franco Manca, which disappointed ­investors in September with a warning that its profits would not hit expectations. The said announcement knocked the company’s shares 22pc. The burger chain owned by private equity investor Hutton Collins named Byron is also shutting down four sites.