Euro Garages refinances and mulls PE deal

FAMILY-owned, Lancashire headquartered petrol station operator Euro Garages is understood to be talking to private equity firms as part of strategic growth plans.

The Darwen-based company, which has just completed a major debt refinancing, would consider selling a minority stake to a private equity investor if the right partner can be found, TheBusinessDesk.com understands.

It is working with investment bank Rothschild – which has helped its recent acquisitions of sites from Shell and Esso – on the process. Last year Rothschild advised another North West family business, Travel Counsellors, on its deal with Equistone.

Euro Garages was founded in 2001 by brothers Mohsin and Zuber Issa after buying a single petrol station near Manchester.

It now has 360 locations and employs about 3,200 staff. It has partnerships with petrol and food brands including Starbucks, Burger King, Greggs and Subway. Revenue in the year to July 2014 was £646m and EBITDA was £30m.

Meanwhile the company has agreed a new multi-million pound finance package to support its recent acquisition of 172 sites.

The funding, understood to be worth more than £100m, comprises senior debt facilities and is provided by a syndicate led by Lloyds Bank. The seven bank club is made up of its incumbent banks of Handelsbanken, Barclays, Allied Irish Bank and Pricoa Capital Group, and newcomers HSBC and RBS.

Lloyds Bank’s Manchester-based mid markets team has supplied revolving credit facilities and term loans, along with one-third of a two-year term loan bridge facility.

The finance is being used to fund Euro Garages’ purchase of 104 existing Esso sites in the South East and 68 Shell sites, bringing the business’s footprint to around 360 service stations across the UK.
 
Mohsin Issa, managing director of Euro Garages, said: “Our new financial arrangement marks a milestone moment for Euro Garages, as we almost double the breadth of our portfolio and extend our banking partners.

“Thanks to a number of key acquisitions across the UK in recent years, we have gained extensive experience in integrating new sites and are looking forward to transferring these new locations into the existing Euro Garages portfolio.

Paul Foster, relationship director at Lloyds said: “Euro Garages is a genuine example of a local business expanding successfully, having grown from just one forecourt in 2001 to a national estate portfolio of over 360 locations.

“This is in part down to the growth in the number of vehicles on the road and the consolidation of the petrol forecourt sector, as well as the increased demand from consumers for retail convenience for groceries and food-to-go, which the management team has capitalised on by developed partnerships with premium brands to encourage footfall and sales.