Three of pub group Mitchells & Butlers’ largest shareholders have clubbed together to buy £350m of new shares in the business.
Piedmont, Elpida Group and Smoothfield Holding have consolidated their holdings in the pub group to form Odyzean, which will own around 55% of the share capital of Mitchells & Butlers.
Some 167m new shares will be offered at 210p – a 36% discount to its 12 February closing price – and will be fully underwritten by Odyzean.
The firm said that the equity raise would “to help address the significant capital needs of Mitchells & Butlers and provide a clear and consistent framework for their future relationship with the company”.
While Odyzean said it was “fully supportive” of Mitchells & Butlers’ management team, the new majority owner said that it intended to review the composition of the pub group’s board to streamline decision making. This is expected to lead to a reduction in the number of independent non-executives.
Odyzean said it also planned to work with the existing management to “ensure the strategy and structure of the business are appropriate to optimise its long-term success and that the time and cost devoted to public company matters are reduced”.
Alongside the equity raise, Mitchells & Butlers has also reached agreement with its banks for a new £150m, three-year unsecured revolving credit facility. The group has also agreed a number of amendments and waivers in respect of certain potential breaches under its secured debt financing arising as a result of the ongoing impact of Covid.
Both the new credit facility and waivers are dependent on the Odyzean deal.
Mitchells & Butlers chairman Bob Ivell said: “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.”
A spokesman for Odyzean added: “We are determined to support Mitchells & Butlers through the current difficult environment. As a result of the pandemic, Mitchells & Butlers has been forced to close all its venues, with significant negative implications for its cash flows and balance sheet. 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 .”
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