Struggling burger chain Byron flipped in cut-price rescue deal

The struggling burger chain Byron has struck a cut-price rescue deal that could herald the closure of a big chunk of its restaurant estate next year.

Sky News has learnt that shareholders in Byron have agreed a transaction under which Three Hills Capital Partners (THCP) will become its majority shareholder by acquiring part of the stake held by Hutton Collins.

FPP Asset Management will become a new investor in the business, which has been suffering amid rising costs and a downturn in trading at many of its sites.

The deal will pave the way for the closure of some of Byron's restaurants, with a mechanism called a company voluntary arrangement (CVA) likely to be considered early next year.

Sources said the entire deal was contingent upon the successful restructuring of Byron's estate.
‎
Information distributed to potential bidders for the business indicated that 13 of its sites are loss-making or marginal, and fall into a category headed 'exit immediately'.
‎
A further dozen restaurants were marked for review and could be exited by a new owner "with or without a premium", the documents said.‎ Byron trades from just over 70 sites across the UK, having opened its first restaurant in 2007.

Sources said on Friday that Byron had also secured additional working capital, with a debt restructuring being agreed as part of the rescue package.

Millions of pounds of new money will be injected into Byron to fund the plans, the sources added, although the precise sum was unclear.

Details of the deal come less than two months after Byron's investors hired KPMG to evaluate options for their ownership of the company.

It has been struck at a massive discount to the £100m valuation attached to Byron when it last changed hands, with some insiders suggesting that it was now valued at as little as £20m.

Byron, which employs 1,800 people, closed four under-performing sites earlier this year.

Insiders pointed out that the company had not breached its banking covenants, contrary to market rumours.

It changed hands for £100m in 2013, when it operated from just over 30 sites.

Its highest-profile customer was George Osborne, who as the Chancellor attracted ridicule when he posted a picture of himself on social media eating a Byron burger during preparations for a Government spending review in 2013.

The chain has seen a downturn in trading performance in recent months amid broader pressure on the restaurant sector amid greater competition from high street and delivery-based rivals.

During the summer, Handmade Burger Co collapsed into administration, while companies including The Restaurant Group - which owns Garfunkel's and Frankie & Benny's - have been forced to change their leadership teams in an effort to revive their fortunes.

Byron named Simon Cope, a former Wagamama executive, as its new chief executive in September, working alongside chairman Dalton Philips, the former boss of Wm Morrison.

Byron declined to comment.