What to watch: Pub group burning £35m a month, Biffa raises £100m, and historic fall for UK GDP

Mitchells & Butlers has raised fresh cash to help it survive the coronavirus shutdown, as it warned it is losing £15m a month. (Yui Mok/PA Images via Getty Images)

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Pub group burning £35m a month

Pub group Mitchells & Butlers (MAB.L) has raised fresh cash to help it survive the shutdown, as it warned it is losing £15m ($19m) a month.

Mitchells & Butlers, which owns chains like O’Neill’s and All Bar One, said it is burning through £30m to £35m a month during the lockdown, with losses coming to £15m a month.

The company, which also owns Toby Carvery and Harvester, has raised £100m through the government’s coronavirus large business interruption loan scheme and re-negotiated existing debt facilities with its banks. Mitchells & Butlers said it now has access to £250m if it needs it and has £130m of cash on hand.

“The financial arrangements we are announcing today put us in good shape to address the challenge ahead,” the company said, adding it hopes to reopen its pubs and restaurants in July.

Shares rose 4%.

Biffa raises £100m

Waste management business Biffa (BIFF.L) has successfully raised £100m from investors.

Biffa said it successfully raised the sum selling new shares to both institutional and retail investors.

The fundraise, announced on Thursday evening, will allow Biffa to invest in growth and cherrypick any acquisitions or deals that might crop up due to the economic crash.

“Not only will strengthening our balance sheet allow us to recommit to these highly attractive investment opportunities with confidence, it will also provide us with the support to take advantage of the growth opportunities we expect to arise out of the crisis,” chief executive Michael Topham said in a statement.

“Biffa went into this pandemic as a leader in the markets we serve, with good momentum and a clear strategy for growth. I look forward to building on this success by executing our strategy.”

New shares were sold at a 5% discount to Thursday’s closing price. The stock slipped 3% on Friday.

Historic fall for UK GDP

The UK economy shrank by 20.4% in April, the steepest contraction on record, as the country’s businesses reckoned with far-reaching coronavirus lockdown measures.

The month-on-month decline in gross domestic product (GDP) completely eclipses the previous record contraction of 5.8%, which was seen just a month earlier in March, according to the Office for National Statistics (ONS).

“April’s fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-COVID-19 fall. In April the economy was around 25% smaller than in February,” said Jonathan Athow of the ONS.

“Virtually all areas of the economy were hit, with pubs, education, health and car sales all giving the biggest contributions to this historic fall,” he said.

Stocks choppy

European stock markets were volatile on Friday, as downbeat GDP numbers and a warning from the International Monetary Fund’s (IMF) chief economist about global growth tempered a potential rebound.

Major European markets had opened down around 1% on Friday but quickly recovered, with the CAC 40 (^FCHI) in Paris and the DAX (^GDAXI) turning positive.

However, that rebound faded almost as quickly as it had begun.

By just before 9am London time, the FTSE 100 (^FTSE) was down 0.8%, while the CAC 40 was 0.1% lower and the DAX was down 0.3%.

The choppy trading followed the worst day of selling since March on Thursday, with the Dow dropping over 1,800 points in New York.

US futures pointed to a rebound later today in New York. S&P 500 futures (ES=F) were up 1%, Dow Jone futures (YM=F) were up 1.2%, and Nasdaq futures (NQ=F) were all up 0.8%.

Asian markets mostly fell overnight. The Nikkei (^N225) dropped 0.7% in Tokyo, the Hang Seng (^HSI) fell 1% in Hong Kong, and the Shanghai Composite (000001.SS) was flat.