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Garden Centre Group asks to extend debt

The Garden Centre Group, owner of Wyevale, is in negotiations with its lenders to change the terms of its borrowings.

The business, one of Britain's biggest garden centre companies, has been talking to its main lender, HBOS (now part of Lloyds Banking Group), about extending the maturity of the company's debt, according to people familiar with the matter.
"This is because the debt facilities expire in early 2012," said one insider.

The move comes after the company, chaired by Andrew Sells, hired PricewaterhouseCoopers (PWC) at the end of last year to look at how much debt the company should have on its balance sheet.

Although some sources claimed the Garden Centre Group has been in talks with a number of City advisers about a plan to "de-leverage" the company and "restructure" the balance sheet, people close to the situation denied this was the case.
One said: "There was some uncertainty at the end of 2010, so the group wanted to look at its levels of debt. However, PWC's piece of work finished last year."

A spokesperson for Lloyds Banking Group said: "The bank is in positive discussions to extend the terms of the debt for the Garden Centre Group. No advisers will be appointed for this process. The Garden Centre Group continues to trade well and has the bank's support."

Like-for-like sales are understood to be up 20pc on last year. "We have had the most successful Easter ever," said the insider.
The Garden Centre Group employs 4,500 people and has 119 sites.
It is owned by a diverse group of shareholders.
Lloyds Banking Group, one of the company's major lenders, effectively owns 51pc via HBOS, following a restructuring that took place in 2009.

West Coast Capital, Sir Tom Hunter's investment vehicle and Nick Leslau's property group, Prestbury, are also significant shareholders.

Sir Tom teamed up with Icelandic investor Baugur and HBOS to take the Garden Centre Group private in 2006, using £370m of debt to pay around £450m for the business.
Back then, the deal was considered innovative as there was an opportunity to consolidate what is perceived to be a highly fragmented industry. Indeed, a few months later, Sir Tom paid just over £30m for Blooms of Bressingham, a rival chain based in Norfolk.

The Scottish entrepreneur was also thought to have considered an acquisition of Scottish-based Dobbies, another listed garden centre chain, after building a significant stake.
However, Dobbies was eventually snapped up by Tesco for £228m including debt.

Sir Tom's garden centre deals turned sour following the financial crisis and his stake in the Garden Centre Group was eventually diluted down after the 2009 restructuring.
Baugur lost its entire investment according to people close to the company.

Source : Ben Harrington - The Telegraph

29 April 2011
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