Former TGI Fridays owner sees shares plummet following demerger – This is Money


By Harry Wise For This Is Money


Shares in the former owner of dining chain TGI Fridays sunk by more than three-quarters yesterday after it completed the demerger of hospitality business Hostmore.
Electra Private Equity saw its share price decline by 77.5 per cent to £1.24 on Tuesday after Hostmore began trading on the London Stock Exchange (LSE) following approval of the demerger by Electra investors yesterday. 
In May, Electra declared its intention to float the group as a separate entity soon after finalising the £22million sale of water treatment company Sentinel Performance Solutions to Netherlands-based manufacturer Aalberts. 
New owner: Electra Private Equity is the former owner of Fridays, rebranded from TGI Fridays
These sell-offs form part of a strategy to return more money to investors and slash the size of its investment portfolio, which began following a boardroom coup by activist investor Edward Bramson in 2015.
As well as Fridays, formerly known as TGI Fridays, Hostmore also runs the newly-formed cocktail-led bar and restaurant business 63+1st, which opened its first branch in September in Cobham, Surrey, and has opened two more in Glasgow and Harrogate, Yorkshire. 
Together, the two chains have 87 establishments between them across the UK. The company hopes to add four more Fridays outlets and three 63+1st outlets over the coming 12 months and potentially expand into new brands and countries.
Hostmore’s chief executive Robert Cook described his group’s listing as a ‘significant milestone for our two brands and provides us with a solid platform to develop our business through a combination of both the organic addition of individual sites and the acquisition of appropriate smaller brands’.
Cook added that while the hospitality sector was experiencing supply chain issues, he was ‘confident in our ability to introduce appropriate mitigating actions to minimise any negative impact, as we have done to date.’
At the same time, Electra declared that its Hotter Shoes brand had seen supply chain problems get better since August and September due to the reopening of factories in Vietnam and India, and ‘some resilience’ from its UK manufacturing facility.
Recent launch: As well as Fridays, Hostmore also runs the newly-formed cocktail-led bar and restaurant business 63+1st, which only just opened its first branch in September
The group blamed increasing freight pricesfor the majority of the rise in supply costs as it has moved to using air freight to transport products more often and had needed to ‘accelerate raw material delivery on reopening of supplier factories.’
Hotter made underlying earnings of £2.5million and revenues of £25million in the six months to July as sales within its retail stores recovered, but it continued to benefit from its digital-led focus, according to results released by Electra today.
Electra also announced today that it would stop becoming an investment trust, move from the LSE’s Main Market to the junior AIM exchange, and rename itself as Unbound Group, with an initial focus on its Hotter Shoes brand.
It claims to sell Hotter Shoes products to around 30 per cent of females over the age of 55 in the UK and is hoping to further deepen its reach towards this group through selling other products and services. 
The company said: ‘Unbound will leverage the highly attractive customer database and the scalable digital infrastructure of Hotter to become a broader business selling other products and services, with related consumer benefits, to the same targeted demographic.’
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