Famous Brands will no longer finance GBK
The group, which also owns Wimpy, spent £120m on GBK in 2016.
It acknowledged that the decision to withhold further financial support for GBK “may result in an impairment of the full value of Famous Brands’ investment in GBK”.
In 2018, Famous Brands wrote off £37m and announced a £16m impairment.
Despite going through a CVA process and closing 20 loss making sites, the brand was showing signs of recovery, with losses narrowing in recent trading updates.
SmallCaps analyst Anthony Clark said Famous Brands’ decision not to spend money on GBK means the business will not survive. “When you withdraw funding for a struggling business it is signalling its death knell.”
He said Famous Brands’ purchase was funded by debt, meaning the company has lost more than the £120m it paid as it would have spent money on interest repayments.
Clark said: “It is a sad end to a business that should never been bought”.
He added the Famous Brands strategy to move offshore “may have been valid but the timing was awful. It was bought just before Brexit and the uncertainty regarding Brexit has seen consumer sales sink”.
