ATO ‘raids’ Jon Adgemis’ Public Hospitality Group
Jon Adgemis’ Public Hospitality Group (PHG) has been raided by the Australian Taxation Office (ATO), however a spokesperson for PHG has denied it was a raid.
There was no ‘raid’ ... this was an access visit by the ATO seeking documents that had been requested. Public missed the deadline to provide such documents,” the spokesman said.
“ATO staff were freely allowed into the property ... however, Public did have the right to refuse entry, which they did not invoke.”
The Adgemis empire is currently in the middle of a $500 million refinancing, as Adgemis attempts to refinance its significant loans with Deutsche Bank in a bid to stave off collapse.
The ATO has had its eye on PHG for weeks, having lodged a tax default notice for $10.7 million against one of Adgemis’ companies weeks ago. It also issued a $266,000 default notice on another of Adgemis’ companies, Lover’s Lane. The notice was subsequently withdrawn.
The PHG empire consists of about 20 venues including Guy Grossi’s Puttanesca Osteria in Melbourne and The Strand Hotel in the Sydney CBD.
Adgemis spread himself thin when he took in millions in debt at high interest rates from several lenders just before the cost of finance increased. The issue was further exacerbated when loan valuations were made on an “as if complete” basis, where value was based on the completion of extensive renovations. Unfortntaley, renovations stalled and suppliers were left unpaid.
Deutsche Bank, Archibald Capital’s Ben Madsen, and Justin Epstein’s Gemi Investments are leading ongoing debt refinancing negotiations. A spokesman for Public stated that the deal is nearing finalisation and aims to satisfy creditors and suppliers while securing the jobs of approximately 400 Public employees. However, some smaller lenders have lost patience and taken action to secure their collateral, with some properties being put up for sale or placed under control.
The Australia Pacific Mortgage Fund, managed by Paul McCombe, recently took control of key properties including the home of El Primo Sanchez in Sydney and the Kurrajong Hotel, which is currently closed. Angas Securities also took control of an apartment block in Bondi, which was put up for sale with price expectations of $15 million but did not sell.
In another case, Mr Adgemis purchased the Manor House in Darlinghurst for $8.25 million in 2022 with a $12.7 million loan from Millbrook Group. The property was auctioned with a $15 million debt but received a bid of only $8 million, which would have resulted in a substantial loss for Millbrook’s investors if the sale had proceeded.
Jonathan Jackson, 23rd May 2024
