M&B extends lending facilities by £100m

Mitchells & Butlers has extended its lending facilities by £100m, giving it access to liquidity of £250m through to 31 December 2021.

This bank lending will be on a new covenant structure, reflecting the revised trading profile of the group through the recovery of its business following re-opening, and continue to be supported by a negative pledge in respect of the group’s unsecured assets.

The additional £100m is structured under the Government-backed Coronavirus Large Business Interruption Loan Scheme.

The group currently has cash balances of £130m, having fully drawn down the existing facilities of £150m.

During closure, the EBITDA loss in a four-week period has stabilised at about £15m, including rent.

Cash burn before debt service is higher than this, primarily as M&B pays down supplier balances at between £30m and £35m per four-week period.

Due to the enforced period of closure, M&B has secured a number of amendments and waivers from controlling creditor Ambac to prevent technical breaches.

These provide stability and flexibility to the group through re-opening, and require M&B to secure the £250m liquidity facilities.

The group has agreed not to pay an external dividend, undertake any share buy-backs or repurchase bond debt until the end of the financial year to September 2021, at the earliest.

A spokesperson said: “The financial arrangements we are announcing today put us in good shape to address the challenge ahead based on what we believe to be a conservative downside scenario in which the reopening of any of our sites is delayed until October and sales then build back to reach full previous year trade levels over the period to July 2021. Our current expectation is for the commencement of reopening of sites from early July this year.”