Mitchells and Butlers’ leading shareholders unite in £350 million raise for pub chain

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ajor shareholders in All Bar Just one proprietor Mitchells & Butlers (M&B) have joined forces to guarantee Britain’s premier outlined pubs chain will get the £350 million it needs to ride out the Covid-19 pandemic.

Horse-racing tycoons John Magnier and JP McManus, Tottenham Hotspur operator Joe Lewis and trader Derrick Smith have consolidated their holdings in the FTSE 250 firm into a new entity, Odyzean. The consortium has stated it will be ready to make the full £350 million available.

M&B reported now that it will difficulty about 167 million new standard shares with a membership rate of 210p per share — a discount of about 36% on the firm’s share price. All existing shareholders will have the option to take part at that price.

The pub huge, which also owns the Toby Carvery and Harvester chains, claimed crashing to a pre-tax annual decline of £123 million in November, down from a income of £177 million in 2019. The newest lockdown is seeing funds burn of £35-£40 million for every month.

If the share inserting goes through, M&B mentioned it has secured an settlement with its banks for a new £150 million a few-12 months financial loan.

The becoming a member of of the major investors’ Piedmont, Elpida Team and Smoothfield motor vehicles presents Odyzean a 55% keeping in M&B, which went into the pandemic as just one of the greatest and strongest listed companies in the hospitality sector and has viewed its shares increase by around 50% this calendar year on vaccine and reopening hopes.

Odyzean’s preemptive open up offer has presently been accredited by City regulator The Takeover Panel even with the entity freshly holding more than 30% of voting rights in M&B – a situation that would customarily indicate it would have to make a takeover provide to other shareholders.

Below the conditions of the open offer you, Odyzean will also capable to acquire additional shares without having getting to make a takeover bid. They will be equipped “to utilize beneath the extra application facility for all of the open offer shares that are not taken up by other shareholders”. 

Odyzean mentioned it is producing the give to entirely underwrite the £350 million elevate “in order to handle the important capital requires of M&B and to deliver a obvious and consistent framework for the consortium’s future romantic relationship with the enterprise”.

M&B has a 12 human being board, and Odyzean explained on Monday that it intends to overview the board’s make-up and glance to “streamline conclusion-building… which may well end result in a diminished stage of unbiased non-govt illustration in the future”.

It extra that the consortium intends that “time and expense devoted to general public company issues are diminished”.

Odyzean stated: “Without this significant fairness injection, the prospective buyers for the enterprise, its 1,600 venues, and about 40,000 British isles workers would be bleak.”

M&B chairman Bob Ivell, Chairman of Mitchells & Butlers said: “We are happy to have obtained the guidance of our main shareholders and essential creditors.”

He explained the capital raising and refinancing “will provide the business with the certainty of funding that it requirements in get to emerge in a much better situation” from the pandemic, and to provide value to shareholders. 

Shares ended up up 8% to 355p by Monday lunchtime.

Analysts at Numis claimed: “This transaction will go away M&B with a person of the strongest stability sheets in the sector… When the sector reopens we be expecting M&B to trade strongly and the valuation remains beautiful”.