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Public Hospitality Group’s Jon Adgemis raided by tax authorities Primrose Riordan and Sarah Thompson
The home and office of Jon Adgemis, the businessman whose Public Hospitality Group empire is in the midst of a $500 million refinancing, have been raided by officials from the Australian Taxation Office.
Officials went through Mr Adgemis’ computer on Tuesday, sources with knowledge of the incident said. A spokesman for Mr Adgemis, a former high-profile KPMG dealmaker, did not respond to questions.
Mr Adgemis’ Public Hospitality Group has been attempting to refinance its significant loans with Deutsche Bank for several weeks in a bid to avert collapse. The ATO lodged a tax default notice against one of his companies weeks ago, and lenders have also been anxious about the negotiations.
Jon Adgemis left behind his corporate advisory practice to launch a major hospitality empire. Peter Braig
Since leaving KPMG, Mr Adgemis has pieced together a hospitality group of about 20 venues which spans from Guy Grossi’s Puttanesca Osteria in Melbourne to The Strand Hotel in the Sydney CBD.
His project started to fray after he took on hundreds of millions in debt at high interest rates from a variety of lenders just before financing costs
In many cases the loans were made using valuations on an “as if complete” basis, a value based on what they would be worth had they undergone extensive renovations. Many of these renovations have been stalled, however, and many suppliers to the group were left unpaid.
This month, The Australian Financial Review reported that the ATO had lodged a tax default notice on Public Lifestyle Management, part of Mr Adgemis’ group of companies, for $10.7 million. It also issued a $266,000 default notice on another of Mr Adgemis’ companies, Lovers Lane.
The Financial Review also revealed that many staff who have worked in the business have also not been paid their superannuation, and some have reported this to the Australian Taxation Office.
Mr Adgemis said at the time he had an arrangement with tax authorities and was in regular contact with the ATO “to ensure staff can be paid their full superannuation entitlements as soon as possible”.
The ongoing debt refinancing negotiations are being led by Deutsche Bank, Archibald Capital’s Ben Marsden and Justin Epstein’s Gemi Investments.
But some smaller lenders have lost patience with the negotiations and put some properties up for sale or appointed controllers to secure their collateral. In the latest instance, one lender, the Australia Pacific Mortgage Fund, took control of one of his hospitality group’s flagship venues, the home of El Primo Sanchez in Sydney’s eastern suburbs.
The Melbourne-based fund run by Paul McCombe also took control of the Kurrajong Hotel, another of Mr Adgemis’ Sydney pubs, which is closed.
Primrose Riordan covers private companies and family offices from the AFR's Sydney newsroom. Primrose was previously South China correspondent for the Financial Times and covered foreign affairs and federal politics in Canberra. Connect with Primrose on Facebook and Twitter.Email Primrose at primrose.riordan@afr.com
Sarah Thompson has co-edited Street Talk since 2009, specialising in private equity, investment banking, M&A and equity capital markets stories. Prior to that, she spent 10 years in London as a markets and M&A reporter at Bloomberg and Dow Jones. Email Sarah at sarah.thompson@afr.
