Mitchells & Butlers to review advisers after investors revolt

Mitchells & Butlers is considering sacking its regular adviser Citigroup following the property fiasco which has cost the company £391m in pre-tax losses.

The pub group that owns the All Bar One and O'Neills chains said yesterday that it had looked at taking legal action against the bank and is also conducting a review of its advisors, which include the Royal Bank of Scotland and Barclays.

Last summer, Mitchells & Butlers was just days away from signing a deal with property entrepreneur Robert Tchenguiz which would have seen 1,300 pubs spun out into a separate property company. Both parties had put hedges in place as a requirement to underwrite the debt package.

Financing had been agreed in principle with Citigroup and Royal Bank of Scotland but the credit crunch struck and the banks pulled out, leaving M&B with hedges in place but no financing for the deal.

Unfortunately for the pubs group, the positions, which were expected to come into place at the same time as the financing, were completed three weeks earlier than forecast.

Chairman Roger Carr told angry shareholders at M&B's annual general meeting yesterday that the board had gone about its plans in a professional way but the group's banks pulled out of the deal when the credit crunch struck claiming a "material adverse change" – leaving the company exposed to the two hedges.

However, one source said M&B was likely to want to shift blame away from the company to the banks, adding: "Why did it put the hedging in place before the financing was agreed and signed?"

Shareholders yesterday called for the scalps of chairman Roger Carr and chief executive Tim Clarke. One accused the management team of taking a "flight of financial madness". Many of the shareholders had been with the company since the time it was part of the Bass group, from which it was separated in 2002.

Although finance director Karim Naffah has already fallen on his sword, the rest of the executives and non-executives remain on board. Mr Carr told investors at the meeting: "My instinct in times of trouble is not to desert a ship." But shareholder Aubrey Franklin retorted: "You have made a right mess of this company... some of you seem to think you are financial whizz kids but you are not running a hedge fund. Your job is to run a pubs and restaurant business, but you have taken your eye off the ball."

Mr Carr said the company faced conflicting interests from those shareholders looking for long-term returns and those interested in short-term gains from a property deal. He said shareholders had stood to gain around £3 a share each if the deal had gone ahead.

M&B is now a takeover target. The company has admitted to "preliminary and tentative" expressions of interest which are believed to have come from potential suitors including Punch Taverns, Marston's and Greene King, along with a number of private equity firms.

Mr Tchenguiz, who owns 22 per cent of the company is hoping for a deal so that he can recoup some of his multimillion-pound losses. However, given the uncertain financial climate, analysts say it might be difficult for many of the potential bidders to secure financing without working in partnership with one another.

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower