Henry J Beans in distressed sale

Food and Drink Group (FDG), which owns Henry J Beans and Jamies, has been sold to UK lower mid-market private equity house NBGI Private Equity, it emerged last week. The bars and restaurants group went into administration with business advisory firm, BDO Stoy Hayward, having broken its banking covenants. As a result, BDO has sold 17 of FDG’s bars – including its Henry J Beans in Chelsea, Wimbledon and Manchester – to Mainpaint, which is backed by UK private equity group NBGI. The London-based investor has brought in Nick Tamblyn, founder of Tiger Tiger bar and former chief executive of Chorion, as chief executive. Bank debt was provided by Barclays. Berwin Leighton Paisner and Baker Tilly advised NBGI, with the latter also providing financial due diligence and Pragma providing commercial due diligence.

“A reduction in the amount of disposable income as a result of the current economic climate has played a role in the group’s difficulties,” said BDO administrator, Shay Bannon. “Securing a going concern sale of the business, which will protect 300 jobs, is positive news for the employees and the industry as a whole,” he added. A number of parties had looked at the business. Distressed fund specialist, Agilo, which is based in the Cayman Islands, is believed to have been one of them.

Duke Street backs second 2e2 bolt-on

2e2, an IT infrastructure business backed by London-headquartered Duke Street Capital, has made its second bolt-on acquisition with a 32p per share bid for Netstore, valuing the IT networking group at approximately £58.1m. The offer, unanimously recommended by Netstore’s directors, represents a premium of 77.8% to the company’s closing price on 18 February, when it first announced approaches from third parties.

2e2 has “more or less doubled in size under our ownership,” said John Harper, partner at Duke Street Capital, adding that his firm has put approximately £240m to work since buying the IT services business from rival UK mid-market private equity firm Gresham Private Equity for £130m in September 2006 – a secondary buyout in which Graphite made 3.6 times its investment after slightly more than three years of ownership. In March 2007, 2e2 paid £52.9m to buy UK security and infrastructure business Compel.

Harper added that the entire business has been refinanced in a debt package totalling £165m from the incumbent banking syndicate comprising Royal Bank of Canada, HSBC, Lloyds, Bank of Scotland and Barclays. Harper added that Duke Street had “invested on the basis of backing continued acquisitive growth as well as organic growth” and had been looking at Netstore ever since the 2e2 MBO. “The recent downturn in the public markets meant that, despite it performing well throughout that period, Netstore’s share price came off in line with most of the sector enabling us to buy it for a reasonable price, given the circumstances”.