UPDATE 2-UK's M&B explores capital raise as new lockdown shuts pubs again

* M&B exploring an equity capital raise

* New lockdown shuts its pubs and restaurants

* Q1 sales plunge 67.1%

* Shares fall around 8%
(Adds shares, analyst comments)

By Tanishaa Nadkar

Jan 7 (Reuters) - Mitchells & Butlers said on
Thursday it may need to raise fresh funds as it deals with a new
coronavirus lockdown that has shut the British pub operator's
sites again after a sharp fall in important holiday quarter
sales.

Shares in the owner of All Bar One and Toby Carvery pubs and
restaurants were 7.9% lower at 219.5 pence by 0926 GMT.

M&B, which has already cut 1,300 roles to reduce costs, said
its board unanimously supported an equity capital raise,
although a decision has not yet been made on the timing, size or
terms.

Following some local restrictions on hospitality in the run
up to Christmas, England went into a new nationwide lockdown
earlier this week as it struggles to curb surging COVID-19 cases
and a new variant of the virus.

Chief Executive Officer Phil Urban said the government's Job
Retention Scheme was 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".

Urban's call for the government to "better understand" the
impact of the restrictions on the sector echoes the frustrations
expressed by the likes of Wetherspoon's and Marston's
.

Stifel analyst Mark Irvine-Fortescue said he believed the
board would want to have sufficient liquidity to protect against
at least two quarters of limited revenue.

"This suggests a potential capital raise in the region of
£215m."

Peel Hunt analysts meanwhile estimated M&B's net debt had
increased from 1.56 billion pounds to 1.71 billion pounds in the
first-quarter.

Sales plunged 67.1% in the 14 weeks ended Jan. 2, as
ever-tightening restrictions across UK and Germany significantly
reduced sales through the festive trading season.

The company said it had a monthly cash burn of 35 million
pounds ($47.52 million) to 40 million pounds before a 50 million
pound debt service payment per quarter.
($1 = 0.7366 pounds)
(Reporting by Tanishaa Nadkar in Bengaluru, Editing by Sherry
Jacob-Phillips, Kirsten Donovan)