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(Alliance News) - Mitchells & Butlers PLC intends to raise GBP350 million through a fully underwritten, pre-emptive open offer amid "bleak" outlook.
The FTSE 250 pub manager has also agreed with its lenders for a new GBP150 million 3-year unsecured revolving credit facility.
Mitchells & Butlers had said back at the start of January that it was exploring an equity raise, as none of its pubs have been open since the start of the third national lockdown in England on December 30. At the start of 2021, the company said, 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.
The open offer is supported by the company's major shareholders - Piedmont, Elpida Group and Smoothfield Holding - which collectively hold around 55% of the issued share capital.
The Birmingham-headquartered restaurant, pub and bar operato will issue approximately 167 million new ordinary shares at a subscription price of 210 pence per share. The price represents a 36% discount to the closing share price on Friday. It is anticipated that the open offer will be fully underwritten at launch, it said.
Shares in Mitchells & Butlers - which owns brands including Harvester and Toby Carvery - were 3.9% higher in London on Monday morning at 341.30 pence each.
In addition, Piedmont, Elpida and Smoothfield have informed Mitchells & Butlers that they have come together and consolidated their holdings under a newly incorporated holding company, Odyzean Group. The move is designed to help address the significant capital needs of Mitchells & Butlers and "provide a clear and consistent framework for their future relationship with the company", it said.
The pub company said looking forward, 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," but Odyzean also noted it is fully supportive of Mitchells & Butlers' management team.
"Odyzean intends to work with the management team to ensure the strategy and structure of the business are appropriate to optimise its long-term success and that the time and cost devoted to public company matters are reduced," the consortium said.
A spokesperson for Odyzean added: "We are determined to support Mitchells & Butlers through the current difficult environment. As a result of the pandemic, Mitchells & Butlers has been forced to close all its venues, with significant negative implications for its cash flows and balance sheet.
"Without this major equity injection, the prospects for the business, its 1,600 venues, and over 40,000 UK employees would be bleak. Our significant financial commitment will help to secure the future of the business and provide a platform for the strong management team to restore the company's operations to good health when circumstances allow."
Mitchells & Butlers Chair Bob Ivell said: "We are pleased to have received the support of our major shareholders and key creditors. 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."
By Paul McGowan; paulmcgowan@alliancenews.com
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