The group, which has more than 1,600 pubs and brands including Harvester and Toby Carvery, said it will issue about 167 million new ordinary shares with a subscription price of 210p per share.
A consortium of three of M&B’s largest investors has said it will be able to make the whole £350m available.
Piedmont, Elpida Group and Smoothfield have joined forced to create a new holding company, Odyzean, holding 55 per cent of the company.
The firms said the new entity will help address “the significant capital needs of Mitchells & Butlers”.
Odyzean said it is fully supportive of the current management team but that it plans to review the current composition of the board of directors.
A spokesman said: “Without this major equity injection, the prospects for the business, its 1,600 venues, and over 40,000 UK employees would be bleak.
“Our significant financial commitment will help to secure the future of the business and provide a platform for the strong management team to restore the company’s operations to good health when circumstances allow.”
M&B, which also runs scores of well-known Scottish watering holes including Edinburgh’s historic Sheep Heid Inn, also told investors that it has secured an agreement with banks for a new £150m credit facility as part of the financial shake-up.
Last month, the pub owner said it had £125m in cash reserves and was burning through between £35m and £40m each month its sites remain shut due to coronavirus lockdowns.
Chairman Bob Ivell said: “We are 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.”
The fundraising move came as the chairman of pub chain Wetherspoon called on ministers to allows pubs to open at the same time as non-essential shops. Tim Martin warned that the pub industry was “on its knees” and needs to reopen to save jobs.
Mark Lynch, partner at corporate finance house Oghma Partners, said: “The M&B fundraise highlights the continued need to provide liquidity in the hospitality sector until trading can re-open and companies can start generating cash again.
“There will be some hope that a government roadmap will set out the best and worst case scenario for re-opening in the coming weeks. At that point we would not be surprised to see more M&B type funding activity.
“It will be the smaller companies, with less access to liquidity, that are likely to struggle the most to survive and this will lead to further consolidation across the sector.”