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The Restaurant Group
Andy Hornby is in firefighting mode at the casual dining group, exiting most of the Chiquito chain via an administration, deploying a company voluntary arrangement to shed 125 mainly Frankie & Benny’s outlets and raising £57 million of new equity. Refocusing the business on the excellent Wagamama and Brunning & Price brands is sensible, but the road to success is still long and painful. Avoid
Loungers
It was all going so well. Yet only a year since it floated at 200p a share, the operator of the Lounge and Cosy Club café-bars is languishing at 127p. However, this is a business that is constantly evolving to stay relevant, while its value-for-money proposition should resonate with a post-Covid audience. Its recent £8.3 million share placing provides an extra buffer. Buy
Mitchells & Butlers
One of the few pub groups not to issue shares, but with a well-invested estate and no apparent desire for acquisitions, the £100 million loan secured should provide all the liquidity it needs. Hold
Marston’s
Another pub company to sidestep an equity raise, although it didn’t need one. Instead, Ralph Findlay, chief executive, formed a £780 million joint venture with Carlsberg, collecting £273 million of cash to reduce debt. Pulling this rabbit out of his hat doubled the share price, but it could have further to go. Buy
JD Wetherspoon
Debt and a £141 million equity raising gives Tim Martin, the pub group’s founder and chairman, the liquidity he needs, while Wetherspoons is ahead of the curve in ensuring its pubs are “Covid secure” come July 4. Expect him to cut prices to coax customers back through the door, although generating the level of sales necessary to make a decent margin could prove a short-term challenge. Avoid
City Pub Group
A solid start to 2020 was halted by the lockdown, but chairman Clive Watson has been through a few downturns and has acted decisively to cut the cost base. Although rents remain a concern, this is a quality company and a £22 million equity raising has enabled him to cut its bank borrowings by two-thirds. Buy
Revolution Bars
Lockdown came just as Rob Pitcher, the chief executive, was starting to sort out this problem child. A £15 million share placing eased the financial pressure, although this was at a cost of a 42 per cent discount owing to the scale of the issue compared to its £17 million market value. The Covid-19 pandemic threatens to halt the momentum. Avoid
Whitbread
Having handed £2.5 billion to shareholders after the £3.9 billion sale of Costa Coffee to Coca-Cola, Alison Brittain, chief executive of the Premier Inn and Beefeater owner, has reclaimed £1 billion via a rights issue. It may sound bizarre, but it’s a pragmatic move that will ensure the FTSE 100 group emerges as strongly as any company from the crisis and in prime position to take advantage of growth opportunities. Buy
hings change quickly in hospitality. Yesterday’s £88.4 million equity raising by Young’s came only six weeks after the pub company’s boss said that it would not need to bolster its finances during the lockdown by selling new shares. Patrick Dardis, 61, the Young’s chief executive, said the group had considered following some peers in raising new equity, but rejected the idea. “Debt is still cheap, so we decided not to go down that route.”The capital raising came despite his insistence that the scale of the liquidity available to Young’s meant it could cope with a “worst-case scenario, taking us through until pretty much this time next year”.Young’s, which began as a brewer in Wandsworth, south London, issued new shares equivalent to 19.2 per cent of its current share capital at a discount of about 10 per cent. Retail investors were able to participate, buying £2.7 million of stock through the Primary Bid platform.
The group plans to reopen all its pubs between July 13 and July 20 and said the new funds would enable it to kickstart investment in its pub estate, strengthen its balance sheet and “pursue opportunistic acquisitions”.This investment opportunity appears to be the key to Mr Dardis’s change of mind. While there is little doubt he could have kept Young’s afloat for 12 months, the restrictions inherent in relying on government-backed loans would have taken growth off the menu. Raising money from the market gives him the flexibility to invest in new and existing pubs. As one analyst put it: “There are two options: you either grow your way out of the crisis through the topline or grind your way out through the bottom line.”
I am a online member of the Time, I will put the article here
I saw the Tempus review late last night and thought it backed up my reasons for remaining top heavy in Marstons and light on JDW and MAB, bet he’s all to familiar with shares dropping the day after he tips them :-) after the 100% rise I thought about rebalancing but MARS has a great balance with supermarket sales whereas JDW is pub based only and a high volume low margin model - they need lots of customers. MAB is similar. Good weekend all and DYOR.
Tempus today said buy, he reviewd several brewers and pubs