Cash emergency call considered by O’Neill’s and Harvester’s owner

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An “extremely uncertain” future faces the British pub and restaurant group Mitchells & Butlers.

Mitchells & Butlers (M&B) pub and restaurant group, which owns pub chains such as O’Neill’s and restaurant brands such as Harvester, said it may ask investors for emergency funds to help it weather a “extremely uncertain” future as it has been left less than three months away from being out of money by forced closures.

The group, which also operates All Bar One, Toby Carvery and Miller & Carter, announced that since Dec. 30 all of its pubs have been closed – the latest evidence of the havoc wreaked on the hospitality industry by the coronavirus pandemic.

The complete loss of trade – under strict closure rules that are supposed to last until mid-February in England – has compounded the company’s problems after a dismal three-month operating period that ended Nov. 26.

Several closures caused overall sales to drop 67 percent this quarter owing to coronavirus restrictions. Even the pubs, bars and restaurants that were able to remain open reported a sales drop of 30 percent.

M&B has cut costs and reduced expenses, but said that after drawing on all its credit facilities, it has only 125 million pounds of cash left. The firm is burning up to £ 40 million a month and is also due on March 15 to make a quarterly debt repayment of £ 50 million.

M&B said that with the cash shortage looming, it will possibly issue new shares and ask investors to purchase them.

As capital increases dilute the value of existing shares, the company’s shares fell 7 percent in early trading.

We welcome the recent positive news on the acceptance and adoption of vaccinations, but the hospitality industry’s future remains highly uncertain,”We welcome the recent positive news on vaccine approval and adoption, but the future of the hospitality industry remains extremely uncertain,”

What constraints on our right to trade lie ahead and for how long, can not be estimated with certainty.

As a consequence, the directors agree that it is appropriate to seek a capital increase to provide greater financial and operational flexibility for the company.
The plan has the support of the biggest shareholders of M&B. Billionaire Joe Lewis, who is also the Tottenham Hotspur football club’s controlling owner, and horse racing magnates JP McManus and John Magnier together own just over 50% of the business.

But when to start the cash call or how much is required, the directors have not yet determined, the company said.

“We are now in a third national shutdown,” said chief executive Phil Urban.

“I continue to be impressed by the resilience and energy of our teams as we continue to open and close stores we’ve invested in to make [them]Covid safe, and I urge the government to better understand the tremendous impact these restrictions are having on the hospitality industry.

“The job retention program is temporarily protecting some jobs, but there is a real and urgent need for support for the businesses themselves if we are to return to being the vibrant sector and major employer we were.”
Analysts at stockbroker Jefferies said it was “no great surprise” that M&B was looking to raise funds, considering that companies such as Wagamama owner The Restaurant Group and Whitbread, which owns Premier Inn Hotels and Beefeater restaurants, have also raised new funds.

“Longer term, M&B looks well positioned to capture market share in a damaged hospitality sector with its mostly owned and well-invested property,” said analyst James Wheatcroft.

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