Blog: Dean BestRanjit Boparan buys another UK business out of administration

Dean Best | 13 October 2016

Just weeks after buying UK turkey processor Bernard Matthews from administration, food tycoon Ranjit Boparan has struck a similar deal.

Mr. Boparan, which also counts major UK grocery supplier 2 Sisters Food Group among his assets, has snapped up American-style restaurant chain Ed's Easy Diner out of administration, adding to his growing presence in the country's foodservice sector.

London-based Ed's Easy Diner was bought in a pre-pack administration deal through one of Mr. Boparan's restaurant chains, Giraffe Concepts, itself only acquired by the businessman from Tesco this summer.

Administrators KPMG said the deal would see 26 of the 59 outlets in the Ed's Easy Diner chain close, affecting 379 jobs. Mr Boparan has taken on the other 33 restaurants and the head office of Ed's Easy Diner, securing around 700 positions, KPMG said. Financial details were not disclosed.

In a statement, Tom Crowley the MD of Giraffe Concepts, said: “Ed’s Easy Diner has been an integral part of the UK casual dining scene for the past four decades and we are very excited about the business joining the group and the opportunities ahead.”

Mr. Boparan's other foodservice assets include fish-and-chip-shop chain Harry Ramsdens, seafood restaurants FishWorks and Indian dining chain The Cinnamon Collection.

Earlier this week, a committee of senior MPs in the UK's House of Commons published a briefing it had commissioned on the pre-pack nature of the Bernard Matthews acquisition.

The Work and Pensions Committee of the House of Commons asked Professor Prem Sikka of the University of Essex to look into the deal, which had come under scrutiny due to fears over the pension entitlements of staff at Bernard Matthews.

Prof. Sikka said the sale proceeds will be used to make a full payment of GBP46.4m to two lenders to Bernard Matthews - Wells Fargo Capital Finance (UK) and PNC Financial Services UK Ltd.

Rutland Partners, the private-equity firm that was the previous owner of Bernard Matthews, has already received GBP34m and is likely to receive a total of GBP39m, Prof. Sikka said.

Prof. Sikka suggested the Bernard Matthews Pension Fund is recording a published deficit of GBP17.5m and is likely to have grown to GBP20m. However, he posited the fund is likely to receive 1p in the pound at best.

"The administration strategy seems to have been carefully crafted to enable secured creditors and controllers of Bernard Matthews to extract maximum cash from the company and dump the pension scheme and other liabilities. No attention has been paid to the hardship caused to retired and existing employees," Prof. Sikka wrote in his briefing to the committee.

When the deal was announced, Boparan Private Office, the private investment vehicle of Mr. Boparan, said Bernard Matthews staff that were now employees of Boparan would continue with the same pension arrangements.

However, Rutland rejected an earlier, confidential offer by Boparan to buy the firm inclusive of all assets and pension liabilities. Rutland at the time refused to comment.

Responding to Prof. Sikka's report, a spokesperson for Boparan Private Office said: "We would welcome any review of this transaction. Boparan offered the seller a deal which would have included all assets and liabilities, including the pension liability. Unfortunately, this offer was rejected.

"Consequently, we have secured a deal that saved 2,000 jobs and has saved the Christmas 2016 turkey supply which was at serious risk without our intervention.

"Whilst we recognise all liabilities including the pension liability is the seller’s responsibility, it should be recognised that we have paid a fair market price for the assets which is materially more than the pension deficit.”

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