Page 34 - Stakis A Case Study

1991 - PROBLEMS

As the business entered the 1990s Reo Stakis could look

back with some pride on the way he had managed the

business. He saw one of his main achievements as having

created employment for 8,000 people. Another was having

contributed to a change in the image of public houses away

from spit and sawdust to something more appealing to late

20th century consumers. He had encouraged people who

had never done so before to eat out. He had helped to

improve the standard of hotel service in Scotland for local

customers, for tourists and for the business user. However,
there was some concern in the business press about the

present and future state of the business.

By December 1990 it was apparent that Stakis might breach

the interest cover covenant on some of their banking

agreements. Consequently, due to cross arrangements this

would put them in breach of all their lines of credit.

In January 1991 Sir Reo said in his chairman's statement,

"We are not immune to the downturn in business which
is affecting the hotel and leisure industries generally. Our

response, in this increasingly difficult climate, has been to

slow down the pace of new developments, to proceed