Mitchells & Butlers PLC (LON:MAB) and Revolution Bars Group PLC (LON:RBG) have both secured some important leeway from their banks in order to survive the total closure of their pubs and bars during the coronavirus lockdown.
FTSE 250-listed Mitchells & Butlers, where 99% of staff have been furloughed, has been given a temporary waiver until 15 May by its lenders to avoid a potential breach of its secured financing terms from its pubs all being shut.
READ: Pub companies in survival talks with lenders despite government support
The owner of the All Bar One, Nicholson's and O’Neill's pub chains said this agreement was pending further discussions with lenders, while adding that it is in “close contact” with other stakeholders, who are supportive of the business.
“The group has material cash resources which we believe should be sufficient to fund obligations well into the second half of the year,” the group said.
Revolution Bars, meanwhile, has been given an extension to its bank credit facility from £21mln to £30mln, with a planned step down moved from the end of June to the end of August and from £21mln to £24mln.
Revolution has reduced its weekly running costs to roughly £400,000 per week by furloughing 98% of staff via the government scheme, directors taking 50% pay cuts, and relief on rents, rates and tax from landlords and government agencies.
Chief executive Rob Pitcher said the bank’s action “has enabled us to be another step closer to being well-positioned to emerge from this crisis”.
M&B shares were down 7% to 208p on Tuesday, while Revolution's were up 25% to 19.3p.
Broker Peel Hunt upgraded M&B to 'buy', estimating that it has reduced its monthly cash burn to £36mln, including CJRS re-payments, the business rates holiday, rent reductions and supplier payment deferrals and a much reduced utilities bill.
"Given the rate of cash burn vs £200m of spare liquidity as at mid-March, we estimate M&B has sufficient liquidity until the end of August under full closure," the analysts said, but cutting their target price from 500p to 300p.
The same analysts forecast Revolution's net debt to be £26mln in June, £28m a year later and £20mln in two, reflecting no expansion until the 2023 financial year and three-and-a-half months of closure in 2020, taking the annual like-for-like sales to minus 27%, and EBITDA falling to £1mln.
"We assume 2021E sales are 19% below 2019’s based on there being some restrictions on trading on re-opening, with trade rebuilding to 90% of normal levels in December."
--Adds share price, broker comment--