The City gave Six Continents something of a kicking last week. Its shares fell more than 10% to 531p on the day that it confirmed it was to split its pubs and hotel businesses. The drop was mainly in reaction to the fact that post split the combined future dividend would be down 38% on present levels. Not welcome news for investors.

The news that ratings agency Standard & Poors had put SixC on creditwatch also hit the stock. At the end of the week the share price had slumped even further to £512.5p.

Tim Clarke, SixC's chief executive, said the share price fall was due to "short-term technical factors as income funds pulled out of the stock." The company defended the decision to cut dividends after the split, saying previous dividends were inflated by the amount of surplus capital on its books. With £700m of that surplus to be returned to shareholders, SixC said it was right for the separated businesses to come up with a fresh dividend policy.

However, Lex in the Financial Times pointed out that SixC's current net debt of £1.3bn will rise to the same again in each of the demerged companies, with cash generation low and capital spending high, especially in hotels.

The problem for SixC now is to convince institutional investors that the demerger makes real financial sense and that the two wings can each conjure up deals to secure their independent futures.

Tim Clarke claims that the SixC retail business will be the “natural consolidator” in the UK pub and restaurant market. The potential is clearly there, but the City may not give it time to prove it.

There is a real danger that the group will become a takeover target itself, unless it can build confidence and value. It could be forcibly broken-up, with parts sold to either trade buyers or more likely taken private by a financial consortium. That would certainly not be to Tim Clarke’s liking or benefit.

It doesn’t matter how big a group is to attract City doubters, especially in the current tough trading conditions. This last week both Old Monk and Aberdeen Steak Houses, the Ofex traded company, were put into administration having failed to gain the backing of their banks. Signature Restaurants and Groupe Chez Gerard are both the subject of bids that will take them off the market. Fish and Jamies have already gone in differing circumstances. SFI’s share price has been battered by analyst comments.

Po Na Na did manage to raise £2m to keep its expansion on track, but the pressure signs are there from top to bottom of the market.

Six C’s ambition to become the main market shaper in the pub and restaurant sector is laudable, but like every other player it may find that it will have to walk a financial tightrope on the way. Falling off will remain a real risk.