Banks prop up Slug & Lettuce owner

LONDON Tue Jul 28, 2009 12:39pm BST

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LONDON (Reuters) - Bar and restaurant chain Bay Restaurant Group, whose chains include the Slug & Lettuce pubs, has agreed its second financial rescue in 18 months, it said on Tuesday.

The company, which operates about 190 outlets, including the La Tasca restaurant chain, said it had secured a new three-year 150 million pound loan with Commerzbank (CBKG.DE) of Germany and Iceland's Kaupthing.

In return, the banks have written off 100 million pounds of debt and taken a stake in the company, one source close to the situation said. He declined to divulge the size of the holding.

The refinancing deal gives the company, which has twice switched owners in the last two years, "secure financial footing" for the future, Chief Executive Paul Symonds said.

Bay Restaurant Group formed in March 2008 to buy up the assets of Laurel Pub Group through a pre-packaged administration backed by Laurel's owner R20, the company controlled by property entrepreneur Robert Tchenguiz.

R20 has not had an interest in Bay Restaurant Group since March 2009, the company said.

A growing number of British pub and restaurant chains have been struggling during the downturn with falling sales and heavy debts.

Last week, banks took control of Paramount Restaurants, which runs the Chez Gerard and Caffe Uno chains, in exchange for halving the company's 120 million pound debt load.

(Reporting by Tom Freke, editing by Will Waterman)

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