Sydney Pub empire faces administration as lenders seize control of key assets

The Jon Adgemis saga continues at pace, with the Sydney pub baron and Public Hospitality Group (PHG) founder now losing control of five pub venues.

American lenders Muzinich have appointed administrators over a large part of his Public Hospitality Group, while BDO administrators Duncan Clubb and Andrew Sallway have taken control of several operating entities linked to Adgemis’ Sydney pub portfolio.

Simultaneously, FTI Consulting's senior managing director, Vaughan Strawbridge, has been appointed as the receiver for the property assets, which include The Strand Hotel in Darlinghurst, Camelia Grove Hotel in Alexandria, Norfolk Hotel in Redfern, Oxford House in Darlinghurst, and a development site—the Exchange Hotel in Balmain.

The appointments were made late on Friday, with Public Hospitality staff notified on Monday.

In a memo sent to staff and suppliers, the administrators expressed their intent to continue business operations while minimising the disruption caused by the appointment. Suppliers were instructed to close existing accounts under the names of the affected companies and to open new accounts for future debts.

Public Hospitality manages around 26 venues across Sydney, Melbourne, and regional NSW and has been struggling under a significant debt burden and rising operational costs in recent months. The decision to place the pubs under administration followed a failed agreement between lenders Archibald Capital and Muzinich, which holds $100 million in debt tied to the pubs.

Several venues managed or partially owned by Public Hospitality remain unaffected including Noah’s Backpackers in Bondi, Claridge House in Darlinghurst, a hotel on Bayswater Road, the Empire Hotel in Annandale, the Town Hall in Balmain, and the Lady Hampshire in Camperdown.

Adgemis also has full control of his Melbourne properties —the Clifton in Clifton Hill, Vine in Collingwood, the Saint in St Kilda, and the Beach House in East Ballina.

Muzinich’s seizure impacts around 100 to 150 staff members.

The relationship between Muzinich and Adgemis is said to have deteriorated as the lenders pushed for revised terms on the debt tied to the pub assets.

Muzinich had taken on Public Hospitality’s debt after purchasing loans that were refinanced by Deutsche Bank as part of a $400 million rescue package.

The firm’s exposure to Public Hospitality accounts for almost a quarter of its Asia-Pacific fund and according to Insiders Muzinich had been attempting to reduce its debt exposure to PHG before tensions escalated, which delayed additional financing meant to cover the cash flow needs of the struggling pub and hotel group.

Monday’s actions could lead to Muzinich selling the pubs, with Archibald Capital expected to attempt to acquire some of these assets, having previously offered Muzinich approximately 92 cents on the dollar for their debt exposure, a deal that reportedly included penalty interest and fees.

Jonathan Jackson, 17^th September 2024