British pub operator Mitchells & Butlers has said that it may need to raise fresh funds as it deals with a new coronavirus lockdown that has shut its sites again after a sharp fall in important holiday quarter sales.
Shares in the owner of All Bar One and Toby Carvery pubs and restaurants were 7.9% lower at 219.5 pence by 0926 GMT on Thursday January 7.
Mitchells & Butlers, which has already cut 1,300 roles to reduce costs, said that its board unanimously supported an equity capital raise, although a decision has not yet been made on the timing, size or terms.
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Following some local restrictions on hospitality in the run up to Christmas, England went into a new nationwide lockdown earlier this week as it struggles to curb surging COVID-19 cases and a new variant of the virus.
Mitchells & Butlers CEO Phil Urban said that the UK government's Job Retention Scheme is temporarily protecting some employment "but there is a real and pressing need for support for businesses themselves if we are to return to being the vibrant sector and important employers that we were".
Urban's call for the government to "better understand" the impact of the restrictions on the sector echoes the frustrations expressed by the likes of Wetherspoon's and Marston's .
Stifel analyst Mark Irvine-Fortescue said that he believes that the board will want to have sufficient liquidity to protect against at least two quarters of limited revenue.
"This suggests a potential capital raise in the region of £215 million," he said.
Peel Hunt analysts meanwhile estimated M&B's net debt increased from £1.56 billion to £1.71 billion in the first quarter.
Sales plunged by 67.1% in the 14 weeks that ended on January 2, as ever-tightening restrictions across UK and Germany significantly reduced sales through the festive trading season.
Monthly Cash Burn
The company said that it has a monthly cash burn of £35 million to £40 million before a £50 million debt service payment per quarter.