Business

Irish magnates’ pub group going through €35-40m a month

McManus and Magnier among underwriters of €406m emergency fundraising

The crisis-hit company is offering seven new shares for every 18 existing shares to qualifying shareholders, at a price of 210 pence per share.

Mon Feb 22 2021 - 09:57

Mitchells & Butlers, a British pubs group in which Irish billionaires John Magnier and JP McManus have a significant stake, is burning through £30-35 million (€35-40m)every four weeks during the current national lockdowns and restrictions, bosses have said.

They added that the business had a cash balance of just £113 million (€130.7m) as of January 16th, with all facilities drawn, and needed to make a £51 million (€59m) interest payment on its debts by March 15th.

Mitchells & Butlers runs 1,700 pubs under the All Bar One, Harvester and Toby Carvery brands.

The dire warning came as the company announced the formal launch of a £351 million (€406m) fundraising exercise to prop up its balance sheet, calling it “critical for the continued operation of the group and its immediate financial stability”.

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The crisis-hit company is offering seven new shares for every 18 existing shares to qualifying shareholders, at a price of 210 pence per share.

The company also revealed it has agreed with pension trustees to delay monthly contributions from January to March. They will resume from April.

In the period from September 27th, 2020, to January 16th this year, sales were 69.8 per cent below the previous year, the company added.

On a like-for-like basis for sites when open, excluding periods of closure, trading was 30.1 per cent down on the year before across the same period.

A consortium of three of its largest investors have previously said they will be able to make the whole £351 million available for the fundraising launched on Monday.

Piedmont, the investment vehicle of Tottenham Hotspur owner Joe Lewis, Magnier and McManus's Elpida Group and Smoothfield, controlled by Derrick Smith, joined forces to create a new holding company, Odyzean, holding 55 per cent of the company.

Without the commitments, a £150 million (€173.5m) bank loan would not have been available, meaning the company can continue to hold out until the end of any restrictions, although further funding may be needed.

Mitchells & Butlers chief executive Phil Urban said: "M&B was a high-performing business coming into the pandemic and, with the support of our main stakeholders, including the equity injection from this open offer, we have every confidence that we can emerge in a strong competitive position once current restrictions are lifted.

“The hospitality industry has done everything that has been asked of it to date and, now that the vaccines are being rolled out and infections are dropping, we are hopeful that pubs and restaurants will soon be allowed to reopen safely so that we can start to serve our customers again.”

Odyzean said it is fully supportive of the current management team but that it plans to review the current composition of the board of directors. – PA/Reuters

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