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Mitchells & Butlers opens emergency equity raise to stave off default

The FTSE250 company launches an open pre-emptive share offer underwritten by a concert party of wealthy individuals to appease creditors in its pub securitization.

Mitchells & Butlers-operated pub chain O'Neill's, pre-Covid

Prime minister Boris Johnson published guidance on Monday on how the UK, which has suffered the second-highest death rate per capita from Covid in the world after Belgium, might emerge from its third lockdown.

Whenever pubs can open again, it won’t be soon enough for many Britons.

On the same day that Johnson addressed parliament, Mitchells & Butlers (M&B), the company behind quintessentially British pubs and restaurants such as O’Neill’s, All Bar One and Toby Carvery, opened a pre-emptive offer to existing shareholders of 167 million new shares, priced at 210p.

That is a 36% discount to the closing price on February 12, the last trading day before the company disclosed its intention to issue new shares.

Normally, an open offer might be priced at a 10% to 15% discount. Many UK companies in 2020 raised emergency equity through accelerated bookbuilds at such discounts to historic share-price lows, diluting existing investors in favour of cash-rich opportunistic newcomers.

We have every confidence that we can emerge in a strong competitive position
Phil Urban, Mitchells & Butlers

Even worse, some then came back for more equity.


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