Brains or Marstons10 Mar 2021 09:02
Who has the better deal?
Brains were severely distressed, financially.
Marstons see an opportunity to manage the Welsh Freehold estate
Enter an agreement (23rd December) to operate 156 pubs in mostly South and West Wales.
15 of these pubs are Leasehold which are to be operated under a management Agreement.
Brains estate employ around 1300 people, which includes Area managers etc.
Marstons agreed to pay rent from 1st April of £5.5m pa
RNS of 23rd December states, " Marstons entered into collaborative discussions with the Company with a view to preserving the Freehold Capital value ....."
RF went on to say, " These High Quality pubs are a great fit with our existing estate........"
Marstons own and operate 106 pubs in South and West Wales.
It has now emerged 25% of Brains Pubs are not high quality ( Marstons state a peppercorn rent is to be payed for 18 months)
The initial agreement is to pay £5.5m rent on the whole estate (156 pubs) That has now reduced 117 pubs and yet a 25 % reduction in rents for the first 18 months has not been calculated. This would amount to approx. £1.37m, which would go some way towards the £2m stated as a central overhead to operate the additional pubs.
Marstons have made clear the additional Pubs will fit well with it's existing estate and yet when asked about staff transfers and possibly savings, Area Managers and support staff numbers will remain the same, consequently there will be no cost savings and area management will be overlapping.
The agreement, we were told, budgetted for Rents to payed on 1st April and yet AA stated during the presentation the payment to Brains has already completed.
Marston's have stated the intention to sell a number of Freehold properties to fund Rental payments to Brains.
Meanwhile Brain's capital assets remain intact.
The agreement and processes can be further analysed , and will be.
Short-term investors may well see benefits initially, for LTH concern must be the clear direction of travel the company is embarked. Selling assets to pay rent and reduce debt , long term is going to diminsh capital value which many investors will want to see.
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