The Birmingham-based FTSE 250 group issued 167m new shares at 210p per share, with shareholder groups Piedmont, Elpida Group and Smoothfield Holding consolidating their holdings under the Odyzean Group – which will hold approximately 55% of the company’s issued share capital.
Before launching the raise, the operator of more than 1,700 pubs said its liquidity position had “deteriorated significantly” as a symptom of the Covid-19 pandemic, with the open offer critical for the continued operation of the group and its immediate financial stability.
What’s more, the funds provide M&B with the capital to reduce its unsecured debt and meet its fixed obligations as well as enabling the resumption of investment in its estate to maintain a competitive position, provide the financial stability and strength to emerge from the crisis.
On top of the new equity, M&B has arranged an additional £150m three-year revolving loan facility, as previously reported by The Morning Advertiser.
This funding comes after M&B told the London Stock Exchange in January that while it had cash balances of £125m, 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.
This included a 3.5% dip in like-for-like sales during the same 52-week period.
Speaking before the launch of its fundraising efforts in February, M&B chairman Bob Ivell said he was pleased to have received the support of our major shareholders and key creditors.
“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,” he added.