Terra Firma

Inntrepreneur Pub Company

Inntrepreneur owned 4,300 tenanted pubs run by individual and corporate tenants. The Inntrepreneur pub estate was "tied", meaning that the tenants' leases required them to purchase beer from the landlord or the landlord's nominated supplier.

Strategy

At the time of Terra Firma's acquisition, the Inntrepreneur estate was performing poorly and was plagued by tenant litigation concerning, primarily, the legality of the "tie" arrangement. Interest in acquiring the portfolio was muted, largely because of the uncertainty surrounding the litigation. Terra Firma identified that a large number of the pubs were performing well and that the value of this portion of the estate was being obscured by concern over the litigation.

Success in a number of important legal cases, and a regulatory ruling that the Inntrepreneur tied lease agreement did not contravene competition laws, paved the way for a sale of the pubs unaffected by litigation, or where litigation had been resolved, to the Unique Pub Company.

Outcome

Unique was sold with Voyager to a consortium of trade and financial buyers in March 2002. Litigation issues affecting the ongoing operation of the remaining pubs were subsequently resolved enabling the sale of the remaining pubs.

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