Mitchells & Butlers insists it is in “good shape” to address the new market landscape in front of it after agreeing a number of liquidity arrangements that will provide it with improved financial flexibility.
The company said it has been in close contact with its main creditors in order to ensure it can meet the challenges it faces, even accounting for a “conservative downside scenario” of its sites not being able to reopen until October. Its current expectation is for the commencement of reopening from early July, however.
M&B, which owns brands such as Harvester and Miller & Carter, said it has agreed with its main relationship banks to the provision of committed unsecured liquidity facilities totalling £250m through to 31 December 2021.
This comprises an extension to the term of its existing £150m facilities plus the provision of additional facilities totalling £100m.
These facilities will be on a new covenant structure, reflecting the revised trading profile of the group through the recovery of its business following re-opening, and continue to be supported by a negative pledge in respect of its unsecured assets.
The £100m additional facilities are structured under the government-backed Coronavirus Large Business Interruption Loan Scheme.
The group currently has cash balances of £130m, having fully drawn down the existing facilities of £150m. During closure, the EBITDA loss in a four-week period has stabilised at about £15m, including rent.
Cash burn before debt service is higher than this, primarily as it pays down supplier balances – which it would expect to reverse on re-opening – at between £30m and £35m per four-week period.
M&B said the full impact of Covid-19 on its trading and financial position is uncertain, depending primarily on the extent of the closure period and the profile of recovery.
The group took swift actions to protect the business when lockdown was first announced, including cancelling all discretionary capital expenditure, furloughing 99% of its workforce, reaching agreements on extended payment terms where possible and eliminating all non-essential operating expenses.