Mitchells & Butlers expresses plans of an open offer to raise £350 million

Mitchells & Butlers plc (LON: MAB) expressed plans of an open offer to raise £350 million on Monday in a bid to cushion the economic impact from the ongoing Coronavirus pandemic. The 210 pence per share offer translates to a 36% discount on the price at which the FTSE 250 listed firm closed the regular session in the stock market on Friday.   

Mitchells & Butlers remained almost flat in premarket trading on Monday but jumped close to 4% on market open. The stock is now trading at £3.41 per share after recovering from a low of £1.01 per share in March 2020.

Mitchells & Butlers secures an additional loan facility

Mitchells named Elpida, Piedmont, and Smoothfield – the three primary shareholders that collectively own 55% of the pub operator, as the underwriters for its offer on Monday. Following the fundraising, the trio intends to cut the number of independent non-executive directors to streamline Mitchell’s board. The underwriters also said that they will consolidate their holdings after the fundraise.

In separate news on Monday, Coca-Cola Amatil said that Coca-Cola Co’s European bottler lifted its takeover offer to £5.54 billion or roughly 6% as trading conditions improved.

Mitchells and Butlers also said on Monday that it secured an additional revolving loan facility worth £150 million for three years. Chairman Bob Ivell commented on the news on Monday and 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 in order to emerge in a stronger position.”

Mitchells & Butlers reported a 67% decline in revenue

In a report in January, the Birmingham-based company said its revenue the quarter that concluded on 2^nd January posted a 67% annualised decline due to the ongoing health emergency that has so far infected more than 4 million people in the United Kingdom and caused over 117 thousand deaths.  

In the same report, Mitchells & Butlers had valued its monthly cash burn at up to £40 million and its debt payments at £50 million.

The British pub operator performed largely downbeat in the stock market last year with an annual decline of just under 50%. At the time of writing, Mitchells & Butlers has a market capitalisation of £1.45 billion.