M&B rejects analyst's cash crisis claims

Mitchells & Butlers (M&B) has rejected comments from a City analyst that it will have to cut investment in the business.

In an investment note Julian Easthope of broking firm Lehman said the pub operator could require a cash injection, while capital investment might have to be reined in in order to be able to meet its dividend commitments.

The market reacted to the note by sending M&B's shares below £3 a share, before they recovered, albeit marginally, to hover around the 330p mark.

In a statement to the stock exchange M&B said it noted the comments but "categorically" refuted them.

M&B said it had borrowing facilities "to meet all of its financial requirements" and the business needed "no requirement for any capital injection to meet its existing funding needs".

It also said it had "fully adequate headroom against its facilities and this position is expected to improve further as the group continues to generate strong cash flows… and all the necessary funding in place to support its existing dividend policy and its investment programme."

The group said trading "continues to be resilient, with buoyant food sales, strong drinks market share gains and continued improvements in productivity. As a result, we expect to report a robust performance at the interim results in May".

M&B will announce the outcome of its ongoing strategic review at the results presentation.

While the group has stuck to its line of looking at all possible options for the business, including a possible merger with Punch Taverns, City observers have concluded that M&B will fight "tooth and nail" to remain independent, a move some institutional shareholders see as an unacceptable outcome.