Pub group taps shareholders for £350m as sales dry up

Mitchells & Butlers, backed by John Magnier and JP McManus, plans share placing

Mitchells & Butlers, the UK's largest listed pub company, which is backed by Irish tycoons John Magnier and JP McManus, has said it plans to raise £350 million (€401 million) through a share placing as pubs press the government to confirm when venues will be able to reopen following the current lockdown.

The group, which owns the Harvester and All Bar One brands, said on Monday that it would offer 167 million new shares at a 36 per cent discount to Friday's closing price in an attempt to "provide the business with the certainty of funding that it needs", said Bob Ivell, the group's chairman.

The pub company has also secured a new £150 million bank facility and agreed waivers on its current debt financing with lenders while its 1,700 pubs remain closed under lockdown rules.

The offer will be fully underwritten by three of M&B's largest shareholders – the businessman and Tottenham Hotspur owner Joe Lewis; Elpida Group, which is backed by the two Irish horse-racing magnates; and Smoothfield Holdings, the vehicle of the currency trader Derrick Smith.

Strategy and structure

M&B said the trio had come together to form an entity called Odyzean that intended to review the makeup of M&B’s board and “work with the existing 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”.

Between them the group owns 55 per cent of M&B’s shares.

Gross domestic product figures published by the Office for National Statistics on Friday showed that the food service sector, which includes pubs, contracted 48 per cent last year.

"The ONS figures heighten the need for a clear reopening date for pubs from the prime minister and stimulus support from the chancellor in his upcoming Budget," the British Beer and Pub Association said. "Thousands of pubs and hundreds of thousands of jobs continue to hang in the balance whilst we wait for clarity on exactly when and how pubs reopen," it added.

Tim Martin, chairman of the pub chain Wetherspoon, called on Monday for the government to reopen pubs at the same time as non-essential shops as the pub industry was "on its knees". – Copyright The Financial Times Limited 2021