The FTSE 250 group will raise funds at 210p per share, with M&B’s three main shareholders – Piedmont, Elpida and Smoothfield, which between them own 55% of the company – underwriting the offer.
The trio will consolidate their holdings under the name Odyzean Group following the fundraise and intend to streamline the board though a reduction in the number of independent non-execs, according to reports in Proactive Investors.
On top of the new equity, M&B has arranged an additional £150m three-year revolving loan facility.
Company cash burn
This news comes after the operator of more than 1,700 pubs under brands including Harvester, Toby Carvery, O'Neills and All Bar One told the London Stock Exchange in January that it has cash balances of £125m, but that its ongoing monthly cash burn hit £35m to £40m during lockdown.
What’s more, the pub group revealed a £300m swing from pre-tax profit to loss in the 52 weeks ended 26 September 2020 – a period in which it was forced to axe 1,300 staff members.
Additionally, the period yielded a 34.1% drop in revenue – which totalled £1,475m compared to £2,237m in 2019 – alongside a pre-tax loss of £123m versus a profit of £177m during the previous financial year.
Certainty of funding
This included a 3.5% dip in like-for-like sales during the same 52-week period.
“We are pleased to have received the support of our major shareholders and key creditors,” M&B chairman Bob Ivell said.
“Mitchells & Butlers was a high performing business going into the pandemic and this capital raising and refinancing will provide the business with the certainty of funding that it needs in order to emerge in a stronger position to take advantage of its strong property portfolio, well known brands and operational expertise in order to win market share and continue its long-term strategy of deleveraging and driving value creation for shareholders.”