‘Chicken king’ supplier Boparan in £250 million debt row

Chicken supplier 2Sisters is facing renewed City pressure over plans to exclude a group of lenders from a £250 million debt repayment.

The row is the latest bout of bad publicity to hit the Tesco supplier found guilty of hygiene failings in March.

Parent company Boparan, owned by “chicken king” Ranjit Boparan, has split bondholders, with one group set for an imminent payout but another left empty-handed.

The feud centres on £370 million of proceeds from the sale of three food firms including Goodfella’s pizzas.

Boparan will pay an initial £95 million to a group holding debts due in 2019 within weeks.

But lenders holding debts that mature in 2021 believe they are entitled to a share, too, claiming bondholders are typically paid back equally, no matter which tranche of bonds they hold.

“We have worked in the industry for a long time and not seen this happen before,” one bondholder said.

The 2021 bonds have fallen 16% to 70p in the pound in response, suggesting the market thinks 2Sisters may be unable to pay back the debt. Some say that is why 2021 holders want a share of the Goodfella’s proceeds.

A group of them are considering legal action if Boparan goes through with the payment, a market source said. 2Sisters said it was in compliance with its legal obligations. “We are not aware of any legal action and we have every expectation we will pay our debts when they are due,” it said.

Sabrina Fox, of researcher Covenant Review, said the original contract contained a loophole that could circumvent the requirement to redeem the bonds equally.

She said: “There are flexible provisions in the bond agreements which the company is arguably using to cherry-pick the repayment of the 2019s over the 2021s,” she said.