Mitchells & Butlers (MAB.L) said it has raised £350m ($487m) and reached an agreement with its relationship banks for a new £150m three-year unsecured revolving credit facility, as the pandemic continues to take a toll on the hospitality industry.
The company's shares ticked up roughly 8% late Monday morning following the news.
The pub chain said in January it had £125m of cash with an ongoing monthly cash burn of approximately £35m to £40m, and a further £50m of debt service due on 15 March.
Chairman Bob Ivell said: “Mitchells & Butlers was a high performing business going into the pandemic and this capital raising and refinancing will provide the business with the certainty of funding that it needs in order to emerge in a stronger position to take advantage of its strong property portfolio, well known brands and operational expertise in order to win market share and continue its long-term strategy of deleveraging and driving value creation for shareholders."
The funds were raised “by means of an underwritten fully pre-emptive open offer” and “will include a facility for shareholders to apply for any shares not taken up by other shareholders, up to a maximum amount depending on their existing shareholdings in Mitchells & Butlers,” the company said in a statement.
Meanwhile, the credit facility is conditional on completion of this offer.
Mitchells & Butlers has also agreed a number of amendments and waivers “in respect of certain potential breaches under its secured debt financing arising as a result of the ongoing impact of COVID-19 and the measures taken to stem the spread of the virus.”
In the event that the offer is not completed, these may be withdrawn.
Any issue of new shares by the company requires the support of a majority of the company's shareholders. The offer is fully supported by the company's major shareholders, Piedmont, Elpida Group and Smoothfield Holding, who together hold approximately 55% of the issued share capital of the company.
The three have informed Mitchells & Butlers that they have consolidated their holdings under a newly incorporated holding company called Odyzean “in order to help address the significant capital needs of Mitchells & Butlers and provide a clear and consistent framework for their future relationship with the Company.”
Odyzean has indicated that it intends to review the composition of the board of directors, which may result in a reduced level of independent non-executive representation in the future, the chain said.
Under the terms of the offer to raise funds, Mitchells & Butlers will issue approximately 167 million new ordinary shares. The subscription price of 210 pence per share represents a 36% discount to the company's closing share price on 12 February.
Meanwhile, the chairman of pub chain Wetherspoon (JDW.L) has urged the government to open pubs at the same time as non-essential shops. Tim Martin warned that the pub industry is “on its knees” and needs to reopen to save jobs.
He said pubs make a massive contribution to the economy, with Wetherspoon alone paying about £10 of tax for every pound of profit it makes.
And the British Beer and Pub Association recently said pubs, forced to close due to lockdown restrictions, urgently need the government to decide when they can reopen from coronavirus lockdown to help them survive.
Pub beer sales slumped by 56%, or £7.8bn last year, the industry body said in a statement.
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