Century float may give Tom Cobleigh ideas

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The progress of CThe progress of Century Inn's moves towards flotation are being closely watched by Tom Cobleigh, another of the independent pub operators created out of the enforced sale of 11,000 outlets by the big brewers over the three years to 1992.

Industry sources say that Tom Cobleigh, based in Mansfield, is looking at the possibility of joining the stock market to fund the acceleration of its expansion. Samuel Montagu has been appointed to advise the company.

Derek Mapp, who set up Tom Cobleigh in 1991 after serving 10 years as commercial director of Mansfield brewery, has aspirations to follow the bigger brewers' drive towards large, family-orientated pubs with an emphasis on selling food.

Tom Cobleigh is spending an average £850,000 on each pub, and recently splashed out £1.4m on a site in Sheffield.

The company, which has increased its estate by 20 per cent to 82 pubs over the past year, declined to comment on the speculation. However, industry observers, who place Tom Cobleigh in the top 10 of the new breed of operators, question its ability to generate enough cash to satisfy the funding needs of its expansion plans. Profits before tax in the six months to September were £802,000.

Tom Cobleigh's funding has mainly come from three large shareholders, which have injected £23.5m into the company. They are European Acquisition Capital, part of the Swedish Enskilda Bank which has put in £6.8m, the Bank of Scotland, which has provided £13m of senior debt, and an unknown brewer that has put up £3.7m of mezzanine debt.

Almost 50 of its pubs are tenanted, which denies it access to the much bigger profits that can be made from managed houses. Cobleigh is aware of this and will churn its estate by selling some tenancies, and converting others into managed houses.

Cobleigh has also taken advantage of the brewing industry's over-capacity problem, which has depressed wholesale prices. It has supply contracts with four of Britain's top five brewers.

Success by Century, which last week issued its pathfinder prospectus and vowed to push on with its flotation despite the volatility of the stock market and investors' uneasiness about new issues, could see more than just Tom Cobleigh follow.

Many of the new pub companies are laden with debt. They can afford to meet interest charges but are prevented from buying more outlets.