British pub operator Mitchells & Butlers has moved to raise £350 million in fresh equity and £150 million in new credit lines to see the Harvester, Toby Carvery and All Bar One owner through the coronavirus crisis.
Mitchells & Butlers, the approximately 1,600 managed freehold pubs of which are predominantly in Britain, said in January that it may need to raise fresh funds as the UK's latest coronavirus lockdown once again shut its pub and restaurants.
Mitchells & Butlers also said in a statement that it has agreed on amendments and waivers with its creditors to avoid covenant breaches.
The pub operator said that Piedmont Inc, Elpida Group and Smoothfield Holding, which own approximately 55% of Mitchells & Butlers, have formed a consortium called Odyzean to become its majority shareholder and will take up the new share issue if other investors do not.
"Without this major equity injection, the prospects for the business, its 1,600 venues, and over 40,000 UK employees would be bleak," an Odyzean spokesperson said.
Stifel analyst Mark Irvine-Fortescue said that the move by Odyzean could raise expectations of Mitchells & Butlers being taken private.
Mitchell & Butlers' combined credit score, which measures how likely a company is to default in the next year on a scale of 100 (very unlikely) to one (highly likely), was "five" as of Monday February 15, Refinitiv Eikon data showed.
Odyzean said that it will take excess shares not taken up by other shareholders and it is "fully supportive" of Mitchell & Butlers' management but intends to review the board, which could reduce the number of non-executives.
Mitchells & Butlers will issue approximately 167 million new shares to existing shareholders at a subscription price of 210 pence per share, representing a 36% discount to the stock's last closing price.
Net Debt, Market Capitalisation And Unsecured Borrowing Facilities Repayment Date
The company had net debt of £2.1 billion according to its annual report and a market capitalisation of £1.41 billion. Its unsecured borrowing facilities of £250 million fall due for repayment in December of 2021.