Jozef Imrich, name worthy of Kafka, has his finger on the pulse of any irony of interest and shares his findings to keep you in-the-know with the savviest trend setters and infomaniacs.
''I want to stay as close to the edge as I can without going over. Out on the edge you see all kinds of things you can't see from the center.''
-Kurt Vonnegut
The former KPMG dealmaker burst onto the hospitality sector after buying up a string of venues. Huge debts and angry lenders are threatening to push it over.
Let me guess, you’re calling about our friend Jon,” one of his exasperated associates sighs. By now, everyone who works in pubs and hotels knows about the plight of Jon Adgemis. So too, probably, does everyone who works in finance, a sector the businessman once ruled as KPMG’s best dealmaker.
Having left the firm in 2018, Adgemis put his deal brokering prowess to work cobbling together an empire that sprawls from the Karen Martini-fronted St Kilda diner Saint George to Maybe Sammy, the celebrated Sydney CBD cocktail bar.
He also cobbled together an extensive list of lenders and a pile of debt that reaches $700 million, according to multiple creditors.
Earlier this month, after extensive negotiations, Bain Capital formally walked away from a $500 million refinancing of Public Hospitality Group after Adgemis was unable to come up with a $2.5 million surety the private equity firm demanded.
As The Australian Financial Review revealed this week, Deutsche Bank has appeared as a potential last-minute saviour. But no deal is certain and plenty of people are owed lots and lots of money.
Jon Adgemis (right) with one of his lenders, Gleneagle Securities’ Lance Rosenberg, in 2022. The Strand in Darlinghurst is part of Public Hospitality Group. Edwina Pickles
Adgemis hasn’t exactly made himself a small target. A favourite of the gossip columns, Adgemis’ rise from mergers and acquisition partner to the “new playboy pub baron in town” has been documented in detail by Daily Mail and The Daily Telegraph reporters. So too has his luxury vintage yacht, Hiilani, his black Maserati, the private helicopter rides to the Melbourne Cup, and the string of model girlfriends (and their Hermes Birkin bags).
And while negotiations between PHG and its lenders continue, the strain is beginning to show. Employees claim their superannuation is not being paid, some suppliers are demanding cash on delivery – one venue, which appears unable to get a gas connection, has taken to using industrial LPG canisters.
If Adgemis gets his refinancing over the line, it could set up PHG for the long term – in the same way Justin Hemmes’ Merivale overcame its early debt troubles and became a hospitality giant. If it fails, there will be plenty of people left out of pocket and wanting to get even.
No one disputes Jon Adgemis’ skills at lassoing cash and talent. “He’s the best talker I’ve heard in my life – gift of the gab, he makes you feel like you are listened to,” one former business associate of Adgemis says. “He could talk anyone into working for him, unless you’ve already worked for him.”
Growing up in Sydney’s eastern suburbs, Adgemis made partner at KPMG at just 28 years old. “Jon was a very good banker, clients loved him – he was smooth, quite intelligent and very connected,” one banker says. In those days, he was particularly close to Bruce Gordon, the Bermuda-based businessman who owns WIN Corporation and holds a large stake in Nine Entertainment (the publisher of The Australian Financial Review).
“He was also extremely ambitious and he outgrew investment banking. That’s because he was hoping to do something really big,” the banker added.
That big thing was Public Hospitality Group, which would buy off-Broadway, unloved pubs, spruce them up, add a fancy restaurant and hotel rooms upstairs, and quickly turn a profit. Perhaps one of the earliest signs that something was not going quite right was an early dispute between Adgemis and Gordon when, in 2021, the billionaire took legal action to recover $6.4 million from a business known as Eastern Property Alliance. The two men eventually reached an out-of-court settlement.
By then, Adgemis had turned to the more expensive end of the lending market for the money needed to bankroll his growing portfolio of pubs, and to pay for the upgrades that were part of the business plan.
Public Hospitality Group's portfolio
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Source: Financial Review
Showing a low-resolution version of the map. Make sure your browser supports WebGL to see the full version.
Source: Financial Review
For example, one of Adgemis’ biggest backers is Gemi Investments – run by George Fleming and Justin Epstein. The group hawked his loans to investors at very high interest rates.
In the case of the site of Noah’s Backpackers in Sydney’s Bondi, which has not yet been redeveloped, Gemi advertised the $54.8 million loan provided to Adgemis to investors at 16.5 per cent with a 2.2 per cent line fee. But the loan collected an extra 5 per cent rate when it went into default after six months.
The settlement date was November 2022, which means it could have been in default and subject to the more than 20 per cent interest rate for 10 months, all while Noah’s has sat closed. Insiders describe a chaotic process in which Adgemis initially wanted to turn the property into a hotel within two months, with staff even going as far as ordering the slippers for guests, only to be told abruptly the focus had turned to a different venue.
Gemi said Egan National Valuers had valued the Noah’s Backpackers property, which sold in 2022 for $68 million, at $103.5 million “as if complete”. The loans are secured by mortgages, but, as with many of Adgemis’ properties, multiple lenders are using them as collateral.
In May, Noah’s Backpackers had three mortgages. Now, it has a fourth against it – to Geoff Lord’s Belgravia Group. It also has two more caveats to Dexit, a company associated with IOUpay’s David Halliday, and Bizcap, which describes itself as Australia’s “most open-minded lender”.
In another example, Ben Madsen of Archibald Capital, one of Adgemis’ lenders, took charge of the company holding El Primo Sanchez last year. But the property itself is mortgaged three times – to Australia Pacific Mortgage Fund, a trustee for Lance Rosenberg’s Gleneagles backed by Thorney, and Gemi. It is subject to three further caveats.
“Archibald Capital provided funding to the fit out of the asset and was holding the business as security. This funding has been repaid and [we] are in the process of transferring the business back to public,” a spokesman for Adgemis says. “We have different arrangements with different lenders. However, our lenders remain supportive of the group.”
Gemi’s Fleming, for one, is bullish. “We’re very positive we’ll sort things out in the next few weeks, we’re supporting Jon,” he says.
Investors were meant to be reassured by Adgemis’ wealth, which Gemi had told them was $40 million. Other lenders had a significantly more rosy view. In one document, Millbrook said he is worth more than $200 million.
For now, Public Hospitality Group’s staff are doing everything to keep the business afloat.In some venues, employees are paying for their own supplies. Multiple suppliers have put the group on “cash on delivery” after invoices have not been paid for months.
Multiple former and current staff say the situation is hurting their reputations and relationships in a small industry built on personal brand. “People didn’t want to be the point of contact for any procurement item as otherwise you would get chased [by creditors],” one former employee says.
“It’s a really unprofessional way to operate.”
Osteria Puttanesca is run by Guy Grossi and owned by Jon Adgemis’ PHG. Gas cannisters are stacked outside. Elke Meitzel
Some staff were even more incensed when they found their superannuation had not yet been paid. Some reported this to the Australian Taxation Office. Ashley Goren, 25, who works at PHG’s Empire Hotel in Sydney’s inner-west, says her superannuation had not been paid from July to March this year.
The cash flow problems have made the redevelopment of some of PHG’s assets more difficult. At multiple locations across Sydney and Melbourne, builders have walked off the job.
“There was a dispute with the lead builder on [the Clifton Hill] project, and it has been resolved,” Adgemis’ spokesman says. “Other projects have been placed on hold pending PHG’s reset of its capital structure.”
The company has denied that it isn’t paying superannuation. It says it has an arrangement with tax authorities and is in regular contact with the ATO “to ensure staff can be paid their full superannuation entitlements as soon as possible”.
The arrangement detailed by PHG is known as a superannuation guarantee charge, which tax officials say applies “when employers don’t pay the minimum amount of super guarantee”.
Plenty of PHG’s most senior staff have already headed for the door. As Adgemis’ empire grew, he recruited a number of former Crown Resorts employees, including casino executive Peter Crinis.
Today, Crinis is long gone. David Stoddart, the former head of finance and commercial at PHG, left late last year. Italian chef Alessandro Pavoni, of Crown Sydney’s a’Mare and Ormeggio at The Spit, is no longer PHG’s culinary ambassador. Pavoni was to have helmed the restaurant at a redeveloped PHG venue, the Town Hall Hotel in Balmain. This is no longer going ahead.
Alessandro Pavoni was expected to open a restaurant in a pub owned by Jon Adgemis. Brook Mitchell
The trouble has also hit close to home – in Sydney’s tight-knit Greek community. Late last year, Adgemis took control of Alpha, the high-end diner at the Hellenic Club in the Sydney CBD. Adgemis’ family is from Kastellorizo, the Greek island home to former Dow chairman Andrew Liveris and the Paspaley family.
At Alpha, which is helmed by George Calombaris, some wonder whether Adgemis is risking relations with his own community should anything go wrong. There is certainly some issue. Adgemis’ spokesman says there is “currently a reconciliation of deposits held by the Hellenic Club for reservations and events to be held post the transition”. “The parties are finalising the amount held and post the reconciliation the outstanding balance will be cleared. This is due to be resolved within the next week,” he adds.
Despite his deal-making skills, Adgemis does not have the best track record in hospitality. Cafe Brass was his first venture in the industry. The venture shut just six months after Adgemis invested with billionaire Alex Waislitz and real estate classifieds mogul Antony Catalano, leaving them out of pocket, alongside their builders, suppliers and staff. The company’s only legal director was a 27-year-old hospitality worker.
“Despite past mistakes, people just continue to give him money,” says one of Adgemis’ former employees. “That’s his skill”.
