A Tayside and Fife-based pub group that has made job cuts and warned on closures has started urgent fundraising.
Mitchells & Butlers is to raise £350 million from its largest investors to shore up its finances as pubs and bars remain shut across the UK.
The pub chain which has five sites in Tayside and Fife sacked 1,300 staff towards the end of last year.
Where are Mitchells & Butlers site in Tayside and Fife?
- Weavers Mill, Campberdown Leisure Park, Dundee
- The Fettykil Fox, Leslie, Glenrothes
- The Glover Arms, Creiff Road, Perth
- The Broxden Manor, Broxden Avenue, Perth
- Harvester Halbeath Park, Dunfermline
The group said it will issue about 167 million new ordinary shares with a subscription price of 210p per share.
A consortium of three of its largest investors has said it will be able to make the whole £350m available.
Piedmont, Elpida Group and Smoothfield have joined forced to create a new holding company, Odyzean, holding 55% of the company.
The firms said the new company will help address “the significant capital needs of Mitchells & Butlers”.
Prospects ‘bleak’ without funding
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.
A spokesman said: “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.”
Cash burn of £35m to £40m a month
Mitchells & Butlers also told investors that it has secured an agreement with banks for a new £150 million credit facility as part of the financial shake-up.
Last month, the pub owner said it had only £125m in cash reserves. It is burning through between £35m and £40m each month its sites remain shut.
Chairman Bob Ivell said: “We are pleased to have received the support of our major shareholders and key creditors.
“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.”