Mitchells & Butlers pub plan on hold
Mitchells & Butlers (M&B) has put on hold its plan to place most of its pub freeholds into a joint venture company owned in partnership with Robert Tchenguiz "until debt markets have improved".
The company said it was now not possible to execute the joint venture "due to the current disruption of the debt markets which has resulted in a significant widening of credit spreads".
A statement by M&B said: "The board continues to believe that such a joint venture structure would be the most advantageous method of releasing substantial value from the property portfolio for shareholders, whilst preserving the integrity of the proven business model. Discussions are continuing with R20 to enable the transaction to be implemented subject to debt markets improving.
"To increase the probability of a successful transaction, M&B and R20 separately entered into a number of debt hedging arrangements intended to be contributed to the joint venture in order to protect against potential increases in long term real interest rates.
"Due to recent market movements, Mitchells & Butlers' share of these hedges, if valued on a mark-to-market basis as at 31 July, would have a post-tax deficit of approximately £60m. These hedges together would be used to underpin the financing of any joint venture."
M&B reported that ternms on the deal had been concluded around the sale of a 50% stake in a £4.5bn property joint venture comprising approximately 1,300 pubs and £240m of rent.
