Mitchells & Butlers to review advisers after investors revolt
Friday 01 February 2008
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.
- 1 Forget 'The Dress': Here are five of the biggest news stories you might have missed
- 2 The black and blue dress: Makers considering a white and gold version
- 3 Prince Harry leaving the armed forced to pursue conservation projects in Africa
- 4 PornHub turns masturbation into energy in bid to save the planet
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is killed near the Kremlin
Leonard Nimoy dead: Star Trek Spock actor dies after suffering lung disease
PornHub turns masturbation into energy in bid to save the planet
Ukraine crisis: Top Chinese diplomat backs Putin, says West should 'abandon zero-sum mentality'
White and gold or blue and black – what colour is the dress? An eyewitness gives a definitive answer
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...