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Wagamama refinances in bid to relieve debt cost pressures

Bradley Gerrard
Wagamama has refinanced a bond in a bid to relieve the burden of its debt costs - Julian Simmonds

Japanese-inspired restaurant chain Wagamama has refinanced debts in an attempt to ease the financial burden that contributed to another year of pre-tax losses.

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

This new bond will be used to ­reduce the group’s shareholder debt, the company said. This included £185.9m of fixed interest loan notes at the end of its previous financial year to April 23, some of which are listed on the Channel Islands Stock Exchange and pay out between 10pc and 12pc interest. All the company’s debt had a term of more than two years but not more than five, according to the accounts.

The refinancing came after a strong year for the company in terms of sales, which rose nearly 16pc to £266m.

The management team said this was because the price of its food remained compelling. This helped operating profits jump nearly a third to £21.9m but a rise in interest payments on its loan notes meant the company suffered a pre-tax loss of £8.19m, albeit down from a loss of £12m in the same period the year before.

Pressures are mounting on restaurant chains as costs climb because of rising business rates, the national living wage and imported food costs. Rivals Tasty, Richoux, Comptoir and Restaurant Group have all warned on trading, as has Franco Manca owner Fulham Shore, which disappointed ­investors last month with a warning its profits would not hit expectations. The announcement knocked its shares 22pc. Byron, the burger chain owned by private equity investor Hutton Collins, is also closing four sites.