Mitchells & Butlers PLC (LON:MAB) said it has reached agreements with its creditors on new arrangements to provide additional liquidity and improved financial flexibility to cope with a slow recovery from the coronavirus lockdown, which is due to end early next month.
Under the enforced shutdown the pub company’s cash burn is around £30-35mln every four weeks, before £17mln of monthly debt servicing.
READ: Pubs call for one-metre social distancing rule as reopening pushed back to 3 July
The latest cash balance is £130mln after drawing down its existing £150mln bank facility, which has now been expanded to £250mln through to the end of December next year via the government-backed Coronavirus Large Business Interruption Loan Scheme.
The FTSE 250 group said it had agreed further waivers to the terms of its secured financing arrangements with Ambac Assurance, following earlier arrangements as a number of technical breaches would have occurred due to the lockdown.
In securing amendments with Ambac, M&B has agreed not to pay shareholders a dividend, undertake any share buy-backs or repurchase bond debt until the end of the financial year to September 2021, at the earliest.
The board believes the new financial arrangements would allow it to keep running even if the reopening of any of its pubs is delayed until October and sales do not recover to full previous year trade levels until July 2021, which it thinks is a conservative downside scenario.
Including the £100mln liquidity facility in the bonds, the company has £330mln of headroom, said analysts at Peel Hunt, equating to almost seven months of liquidity under full closure.
"This is better than we expected."
M&B shares frothed up 10% on Friday morning to 220.5p, more than double its low of mid-March and now down less than 52% since the start of the year.