Marston’s, the regional brewer and pub operator, this morning announced plans for a fully underwritten £176m rights issue and said it would use the funds for a rollout of new build pubs.
The company, which is led by chief executive Ralph Findlay, said it would be issuing 298, 865,230 shares at 59p – a 39.6% discount on the closing price of 140.25p last night.
It said it intended to use £140m of the money, which is being underwritten by RBS Hoare Govett and JP Morgan Cazenove, to deliver 20 – 25 new build pubs per year in the short term and added they usually returned 15% ebitda return on capital invested.
The remainder would be used to repurchase securitised debt, the group added.
Marston’s had previously put on hold its new build plans, but Ralph Findlay, chief executive, said: “The current market environment represents a rare opportunity to secure excellent sites on attractive terms. The rollout of new build pubs can generate higher returns at lower risk than acquiring mixed packages of existing pubs and is important to our long-term strategy to drive shareholder value.
“We temporarily slowed our new build programme in late 2008 in response to the economic and financial challenges facing the industry. The rights issue will allow us to take advantage of situations arising in the current economic climate and accelerate the rollout of the new build pubs in attractive locations at attractive investment costs.
“It will also provide the financial flexibility to allow us to consider opportune repurchases of our debt or, if opportunities arise, to make acquisitions of high quality assets at attractive prices.”
The company added that its managed pubs were running at +1.1% like-for-likes in the 16 weeks to 6 June and trends in the tenanted business and in the beer company were “in line with the first half year”.
The issue follows similar moves by Greene King and then Punch Taverns earlier this week.
