Caffe Nero restructures loans to fund expansion

Caffe Nero laid the basis for faster international expansion with the restructuring of its £275m of loans on terms more favourable than its existing facility.

The chain of 600 coffee shops said the facility provides for £100m of senior debt and around £100m of junior debt, as well as £25m for capital expenditure.

The average cost of capital will drop by more than 3 per cent and the loan terms have been extended to the end of the decade.

Founded in 1997 by Gerry Ford, Caffe Nero has used its own profits to build up its presence in the UK at a rate of up to 50 shops a year for the last decade.

UK expansion will continue at that rate for the next five years, said Mr Ford. But the facility will enable it to step up the number of new shops abroad from around 10-15 a year to 30 to 40.

Caffe Nero is in Turkey, Cyprus, the UAE and Poland. Mr Ford said he would add new markets, without saying where. The average cost of each new shop is £250,000.

Mr Ford said Caffe Nero's expansion plans were not as deep as those of rival Costa Coffee, owned by Whitbread. Costa is targeting 300 new stores and a further 850 Costa Express kiosks by April.

"The difference between us is they went earlier and went for more of a shotgun approach. We've been more pragmatic and more rifle-focused in our strategy," he said.

Over halfway through its financial year, Caffe Nero's like-for-like numbers were "pretty healthy" both in the UK and abroad, he added.

Revenues in 2013 were £227.9m and earnings before interest, tax, depreciation and amortisation were £34.9m, up from £199.1m and £31.6m respectively the previous year.

The group is mostly owned by Mr Ford and his family, while 10 per cent is held by employees. The group was taken private in 2006 in a £225m deal.

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