In a Covid-19 financing and dividend update released on 14 May, the Wolverhampton-based operator of around 1,350 pubs revealed that it has agreed an additional 180-day bank facility of £70m subject to final documentation.
On top of this, the brewer of Hobgoblin, Wainwright and Marston’s Pedigree explained it had reached an agreement with banks to amend its loan covenants for September 2020 and March 2021 having already sought a limited number of technical waivers and amendments from bondholders.
The FTSE 250 company’s statement explained: “We believe this additional 180-day financing facility, together with ongoing Government support on employment costs, deferred tax payments and rent and rates relief – as well as continued income from beer sales into the off-trade – provide us with sufficient liquidity to meet our obligations beyond the end of the financial year even if pubs were closed until then.”
Additionally, after warnings on 18 March that its board would be unlikely to recommend a May dividend, Marston’s board has scrapped dividends for the 2020 financial year, with future pay-outs to be reviewed once trading resumes.
The operator’s nationwide network of sites under brands such as high street mainstay Pitcher & Piano, have been closed since 20 March when Prime Minister Boris Johnson called last orders in Britain’s pubs in light of the Covid-19 outbreak.
Prudent approach
Marston’s latest measures follow an announcement on 20 April that it had secured a waiver from its financial backers to avoid a breach of loan repayments during the Covid-19 shutdown as a “precautionary” step.
The waiver issued by HSBC applied to Marston’s cessation covenant and allowed the operator to fully suspend its business for 30 days without defaulting.
“We continue to take an extremely prudent approach in our management of the business during this period of unprecedented uncertainty, the timescale of which remains unclear pending further guidance from the UK Government as to how, and when, the current state of much reduced social activity can be relaxed and pubs allowed to reopen,” Marston’s said on 20 April.
As reported by The Morning Advertiser (MA) in October 2019, Marston’s revealed net debt of £1.39bn in a trading statement for the year ending 28 September 2019, with the reduction of this figure described as the company’s “principal focus” by chief executive Ralph Findlay.
What’s more, in keeping with plans to slash its net debt by £200m by 2023 by increasing disposal values from £40m to £70m for the current financial year, Marston’s agreed the sale of 137 pubs to Admiral Taverns in November 2019 as well as a deal to offload 29 pubs to Hawthorn Leisure in January 2020.
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