Mitchells & Butlers in £350m placing as major shareholders take control

Three shareholders in Mitchells & Butlers have combined to control 55% of the Harvester owner as the pub giant said it planned to raise £350m through a discounted raising.

The company, which has seen sales battered by the Covid-19 pandemic, said it will issue around 167m new shares at 210p a share - a 36% discount to the closing price on February 12. It has also reached agreement with banks for a new £150m three-year year unsecured revolving credit facility to bolster its balance sheet.

Major shareholders Piedmont, Elpida and Smoothfield, which collectively own about 55% of the company, "fully supported" the offer, Mitchells & Butlers said on Monday, adding that the trio had consolidated their holdings under a newly incorporated holding company Odyzean.

Currency trader Joe Lewis owns Piedmont, while the Irish billionaires and horse racing tycoons John Magnier and JP McManus control Elpida. Another forex trader, Derrick Smith, runs Smoothfield. The group is known collectively as "Sandy Lane set”, after the expensive Barbados hotel they liked to frequent.

"Odyzean has indicated its intention to make available the full amount of £350m to be raised, to ensure that the proposed open offer will be fully subscribed in all circumstances,” Mitchells & Butlers said.

The company added that it had agreed waivers over potential breaches under its secured debt financing as a result of the ongoing impact of Covid and measures taken to stem the spread of the virus. Mitchells & Butlers also owns the All Bar One, O’Neill’s and Toby Carvery brands.

Odyzean issued its own statement on the deal, it was "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."

Odyzean added that it would also take up excess shares not bought by other shareholders to ensure that the offer was fully subscribed. It also intends to review the company’s board, which could reduce the number of non-executives.

Mark Lynch, partner at corporate finance house Oghma, said the fundraise "highlights the continued need to provide liquidity in the hospitality sector until trading can re-open and companies can start generating cash again".

"There will be some hope that a government roadmap will set out the best and worst case scenario for re-opening in the coming weeks. At that point we would not be surprised to see more M&B type funding activity. It will be the smaller companies, with less access to liquidity, that are likely to struggle the most to survive and this will lead to further consolidation across the sector.”