Nando’s is in crisis talks over its debt pile after spending £20m to make its UK restaurants Covid-secure.
Bosses are holding discussions with Barclays to secure potential waivers to the covenants on £300m of loans, recently filed accounts show.
The chicken chain is expecting to breach strict banking terms – an event that, if unaddressed, would leave it in default. Its UK arm employs almost 17,000 people and operates nearly 400 sites.
In the company’s economic base case scenario and a potential worst-case one, auditor KPMG said: “The group is reliant upon agreeing waivers of covenants in May 2021 with the bank.
“If this is not successful further financing would be required.”
Dick Enthoven, the South African owner, injected £100m into Nando’s in September. It allowed the business to draw down £125m from a corporate overdraft provided by Barclays. Talks are also continuing with landlords to secure rent holidays and deferrals.
Nando’s said it had spent £20m to ensure sites were Covid-secure in the UK, taking the average cost per restaurant to roughly £50,000 as social distancing measures and protective kit for staff were introduced.
Sources close to the company stressed that shareholders and banks continued to support the business and there was “no scenario” in which Nando’s would be unable to trade.
Rob Papps, the group CEO, said: “Whilst the current period remains extremely challenging, we remain confident in the long-term prospect.”