News Article Comments : How M&B hedge cost top job

Some are saying the curse of Robert Tchenguiz has struck again. The departure of Mitchells & Butlers chief executive Tim Clarke last week will be seen as pretty much the direct result of allowing Tchenguiz to commandeer the company’s strategy back in 2007.

M&B put in place interest rate and inflation swaps to hedge against a proposed property joint venture with Robert Tchenguiz’s R20 in the summer of 2007. In the event, the company found itself having to stump up for round after round down at the Hare & Hedge Fund.

The timing of the deal was terrible with the credit crunch tsunami of fear breaking on the shores of the financial sector just as the deal was reaching fruition. M&B’s hedges turned out to be a huge bet in entirely the wrong direction. The company thought interest rates would climb whereas they have, as we know, headed south ever since the summer of 2007.

M&B closed 70% of the hedges in February 2008 at a cash loss of £270m or so. Around 30% of the hedges were allowed