22nd Feb 2021 08:52
(Alliance News) -Â Mitchells & Butlers PLC on Monday said its liquidity position has "deteriorated significantly" due to virus restrictions as it launched an open offer to raise up to GBP351 million.
The offer is "critical" for the continued operation of the group - which owns All Bar One and Toby Carvery - and its immediate financial stability.
"An open offer of up to GBP351 million provides the company with the capital to reduce its unsecured debt and to support the group's secured debt financing through an injection of equity, allowing the group to meet its fixed obligations," the firm said, adding that the funds will allow investment into its estate to remain competitive.
In a separate press release on Monday, the pub operator said that since the UK government announcement on December 30, which placed around 78% of England's population under tier 4 measures, none of Mitchells & Butlers' sites have been open. All its German businesses were closed at the start of November.
In the period September 27 to January 16, total managed sales were 70% below the prior year. On a like-for-like basis - for sites when open, excluding periods of closure - trading was down 30% on a year ago.
The group had a cash balance of GBP113 million as at January 16 with all facilities drawn.
Agreement has been reached with the trustee of the company's pension funds to delay monthly contributions from January to March, inclusive, with these becoming due in April 2021.
"Taking this into account, since the start of the year, during which time the group's estate has been fully closed, cash burn was estimated to be between GBP30 million and GBP35 million per four-week period. In addition, the group also has securitised debt servicing costs of GBP51 million per quarter (comprising interest and amortisation), and all non-essential capital expenditure continues to be suspended," Mitchells & Butlers said.
Under the open offer, Mitchells & Butlers is proposing to offer new shares to all qualifying shareholders at a price of 210 pence per share on the basis of 7 new shares for every 18 existing shares.
"The Odyzean Group has entered into an irrevocable undertaking with the company to take up its entitlements under the open offer and to subscribe for any additional shares that become available through, and are allocated to it under, the excess application facility. The open offer is therefore fully underwritten," said Mitchells & Butlers.
Morgan Stanley & Co International PLC is acting as financial adviser, global co-ordinator, joint bookrunner, corporate broker and sponsor, alongside NM Rothschild & Sons Ltd as financial adviser to the company. HSBC Bank PLC and Banco Santander SA are acting as joint bookrunners.
"Mitchells & Butlers was a high performing business coming into the pandemic and with the support of our main stakeholders, including the equity injection from this open offer, we have every confidence that we can emerge in a strong competitive position once current restrictions are lifted," said Chief Executive Phil Urban.
"The hospitality industry has done everything that has been asked of it to date and, now that the vaccines are being rolled out and infections are dropping, we are hopeful that pubs and restaurants will soon be allowed to reopen safely so that we can start to serve our customers again."
Shares in Mitchells & Butlers were down 1.6% at 317.98 pence in London on Monday.
By Lucy Heming;Â [email protected]
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