7th Jan 2021 08:39
(Alliance News) - Mitchells & Butlers PLC said Thursday it is exploring an equity raise as the bar owner faces another extended period of time with none of its sites open.
Shares in Mitchells & Butlers were down 8.4% in London on Thursday morning at 217.50 pence, making it the worst performing midcap stock.
The UK House of Commons, was recalled from its Christmas break to vote on the lockdown restrictions on Wednesday, and voted with a 508 majority for the stay-at-home measures, which could be in place until the end of March.
The Birmingham-headquartered restaurant, pub and bar operator said it is exploring an equity capital raise, to give the group increased financial and operational flexibility.
"No decision has yet been made with regards to the timing, size, or terms of any such equity capital raise," the All Bar One owner added.
Mitchells, which also owns brands including Harvester and Toby Carvery, said its board is "unanimous" in supporting the equity raise.
"We welcome recent positive news on vaccine approval and roll-out but the future facing the hospitality sector remains extremely uncertain. It is not possible to estimate with any confidence what restrictions on our ability to trade lie ahead of us and for how long," Mitchells said.
The firm said it has had no sites open since December 30. For the 14 weeks to January 2, total sales were down 67% year on year, with like-for-like sales - when its sites were open - down 30% year on year.
Mitchells said it has again reduced discretionary capital expenditure and operating costs to a "minimum" while the UK enters a third national lockdown.
The company noted it has GBP125 million cash on hand, but has withdrawn all of its available facilities. It also noted its ongoing monthly cash burn of about GBP35 million to GBP40 million and has GBP50 million debt service payments per quarter to contend with.
Chief Executive Paul Urban said: "We are now in a third national lockdown. I am consistently impressed by the resilience and energy of our teams as we repeatedly open and close businesses that we have invested in to make Covid secure and urge the government to better understand the huge impact these restrictions are having on the hospitality sector.
"The Job Retention Scheme is temporarily protecting some employment but there is a real and pressing need for support for businesses themselves if we are to return to being the vibrant sector and important employers that we were."
Despite the uncertainty facing the firm, Urban said he is confident Mitchells can emerge from the pandemic in a "strong competitive position".
By Paul McGowan; [email protected]
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