Hostmore shares plunge 90% as UK firm drops TGI Fridays buyout plan

By DhanushVignesh Babu

(Reuters) – Shares of Hostmore plunged more than 90% on Monday as the British restaurant operator dropped plans to buy TGI Fridays after its target was removed as the manager of TGIF Funding, which owns the right to collect royalties from the restaurant chain franchise.

Hostmore, which operates restaurant chain TGI Fridays in the UK via its unit Thursdays (UK), said the sale of Hostmore retail outlets is expected to be completed in September, albeit at a lower value than what Thursdays owed.

“The predictable and highly cash-generative royalty stream of TGI Fridays was the primary attractive feature for the Group in pursuing the acquisition,” Hostmore said.

The company did not say why TGI Fridays lost the TGIF Funding management role and has not immediately responded to Reuters queries.

Shares of the British hospitality company have fallen more than 99% since its record high of 134 pence in November 2021.

TGI Friday’s assets have served as collateral for asset-backed securities it sold in 2017 and it lost control of them last week after it failed to provide bondholders with required documents on time, Bloomberg reported last Thursday.

Hostmore, which floated on the London bourse in 2021, is also dealing with mounting debts and loss-making TGI Fridays outlets it owns, which last year resulted in management changes, deep cost cuts and made it halt new store openings until 2025.

The company’s net debt at the end of the first half of 2024 financial year stood at 29.7 million pounds ($38.86 million) against its market value of 1.3 million pounds.

Hostmore said that it expected to be “wound up” and de-listed once the sale of the retail outlets, is completed.

The board also conducted a strategic review of other value-enhancing options and found that none of the other alternatives was currently expected to provide value to the group, it said.

TGI Fridays will continue its operations in the UK under a new ownership, Hostmore said.

($1 = 0.7642 pounds)