Thai Union has promised to guarantee as much as USD 65 million (EUR 65.2 million) of the outstanding credit facility balance of its subsidiary Red Lobster, an international restaurant chain it purchased in 2020.
In a 24 August notification to the Stock Exchange of Thailand, Bangkok, Thailand-based Thai Union said it will provide a guarantee for approximately 25 percent of the outstanding credit facility balance of Red Lobster Master Holdings. Thai Union owns 25 percent of the firm’s common stock units and 24 percent of its preferred units, according to the filing. The motion to provide the funding was approved by Thai Union’s board of directors on 24 August and it will be charged to Thai Union’s third-quarter results.
“The board of directors has considered and agreed to approve the guarantee … to support and enhance RLMH liquidity management capabilities,” it said.
Red Lobster operates 719 locations in 44 U.S. states and 12 countries and generated an estimated USD 2.5 billion (EUR 2.49 billion) in revenue in 2019.
Thai Union made a USD 575 million (then EUR 481 million) strategic investment in Red Lobster is 2016 and then purchased the chain outright in 2020, along with the Seafood Alliance investor group, comprised of restaurant industry executives Paul Kenny and Rit Thirakomen.
At the time, Red Lobster faced the prospect of a USD 380 million loan (then EUR 318 million) coming due in July 2021, but the company was able to refinance that loan in January 2021.
Red Lobster has been a drag on Thai Union’s profits since its purchase, and credit ratings agency Moody’s downgraded Red Lobster’s credit rating to “poor quality and high credit risk” and gave it a negative ratings outlook in June 2021. Moody’s Investors Service Vice President and Senior Credit Officer William Fahy told SeafoodSource at the time Red Lobster’s outlook was poor due to the impacts of the COVID-19 pandemic on the foodservice sector.
In August 2020, Red Lobster engaged professional financial debt advisory firms Guggenheim Partners and PPJ Solomon to help “find good ways” to refinance its loans, Thai Union Chief Financial Officer Joerg Ayrle said at the time.
The company is currently without a CEO after Kelli Valade resigned in April 2022 after only eight months in the role.
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