Owner of scores of Scottish pubs and All Bar One launches £351m financial lifeline

Mitchells & Butlers owns a string of well-known brands including All Bar One, which includes a bar on Edinburgh's George Street, and Miller & Carter. Picture: Ian Georgeson Photography

They added that the business had a cash balance of just £113m as of January 16, with all facilities drawn, and needs to make a £51m interest payment on its debts by March 15.

The bleak warning came as the company announced the formal launch of a £351m fundraising exercise to prop up its balance sheet, calling it “critical for the continued operation of the group and its immediate financial stability”.

M&B, which has more than 1,600 pubs and brands including Harvester and Toby Carvery, also revealed it has agreed with pension trustees to delay monthly contributions from January to March. They will resume from April.

In the period from September 27 2020 to January 16 this year, sales were 69.8 per cent below the previous year, the firm added.

On a like-for-like basis for sites when open, excluding periods of closure, trading was 30.1 per cent down on the year before across the same period.

A consortium of three of its largest investors have previously said they will be able to make the whole £351m available for the fundraising.

Piedmont, Elpida Group and Smoothfield joined forced to create a new holding company, Odyzean, holding 55 per cent of the company.

Without the commitments, a £150m bank loan would not have been available, meaning the company can continue to hold out until the end of any restrictions, although further funding may be needed.

Phil Urban, chief executive of M&B, which also runs a string of well-known Scottish watering holes including Edinburgh’s historic Sheep Heid Inn, said: “M&B was a high-performing business coming into the pandemic and, with the support of our main stakeholders, including the equity injection from this open offer, we have every confidence that we can emerge in a strong competitive position once current restrictions are lifted.

“The hospitality industry has done everything that has been asked of it to date and, now that the vaccines are being rolled out and infections are dropping, we are hopeful that pubs and restaurants will soon be allowed to reopen safely so that we can start to serve our customers again.”

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.

Greg Johnson, an analyst at brokerage Shore Capital, said: “As the hospitality industry reopens and trading recovers, we would anticipate a return to pre-pandemic multiples, especially with the potential for stronger operators, such as Mitchells & Butlers, to gain market share.

“However, the road to recovery is uncertain and we continue to see better value in other domestic recovery plays, especially if the shareholder structure weighs on valuation.

“The Odyzean Group, which acting as the controlling group for Elpida, Piedmont and Smoothfield, own 55 per cent of the stock and have underwritten the offer.”

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