Spirit Pub notes potential defaults on £300 million floaters due 2034

By Wendy Van Sickle

Columbus, Ohio, Nov. 17 – Spirit Issuer plc said the debt-service coverage ratio covenant under its £300 million floating-rate class A5 secured debentures due 2034 (ISIN: XS0206409285) was breached in the period ending Oct. 3.

The breach constitutes a potential borrower group event of default under the issuer/borrower facility agreement and will become a borrower group event of default if it is not remedied within 30 days, according to a notice filed with the London Stock Exchange.

The borrowers, Spirit Pub Co. (Managed) Ltd. and Spirit Pub Co. (Leased) Ltd., do not plan to take steps to remedy the breach, which will therefore become a borrower group event default on Dec. 15.

Also, the notice said that if the ratio of free cash flow to debt service (OpFlex) is less than 1.5:1 as at the most recent financial quarter date, the obligors are obliged to promptly appoint or accept the appointment of a financial adviser to prepare a report. Because the breach of the threshold is a result of pub closures mandated by the government in connection with the Covid-19 pandemic, and for the purpose of preserving the cash reserves of the borrowers, the obligors do not plan to appoint a financial adviser, which will give rise to a borrower group event of default on Nov. 29.

The borrowers do not plan to seek a waiver in respect of such events of default and potential events of default in light of their failure to obtain a bondholder waiver of previous default events, the notice states.

Spirit Issuer is a London-based lender to group companies of Spirit Pub Co. plc.

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