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.

News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
news

As anti-Semitic attacks rise, Grant Feller re-evaluates his identity

Life and Style
food and drink

Savoury patisserie is a thing now

News
news

Meet the primary school where every day is National Poetry Day

News
people Biographer says cinema’s enduring sex symbol led a secret troubled life
PROMOTED VIDEO
News
newsGlobal index has ranked the quality of life for OAPs - but the UK didn't even make it into the top 10
News
people

Kirstie Allsopp has waded into the female fertility debate again

News
In 2006, Pluto was reclassified as a 'dwarf planet'
scienceBut will it be reinstated?
News
The moon observed in visible light, topography and the GRAIL gravity gradients
science

...and it wasn't caused by an asteroid crash, as first thought

News
people
News
Researchers say a diet of fatty foods could impede smell abilities
scienceMeasuring the sense may predict a person's lifespan
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
News
peopleStella McCartney apologises over controversial Instagram picture
News
Gillian Anderson was paid less than her male co-star David Duchovny for three years while she was in the The X-Files until she protested and was given the same salary
people

Gillian Anderson lays into gender disparity in Hollywood

Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
Life and Style
fashionThe Secret Angels all take home huge sums - but who earns the most?
Sport
football

Striker ignored Brendan Rodger's request to applaud audience

News
i100
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Arsenal vs Galatasaray: Five things we learnt from the Emirates

Arsenal vs Galatasaray

Five things we learnt from the Gunners' Champions League victory at the Emirates
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?