Pub groups secure reprieve from lenders to help survive coronavirus lockdown
All Bar One giant Mitchells & Butlers and cocktail bar owner Revolution Bars have become the latest firms in the sector to secure vital breathing space from their lenders to weather the coronavirus crisis.
M&B, which also owns the Toby Carvery and Harvester chains, said it had agreed a waiver with lenders until May 15 to avoid a debt default after being forced to close all of its 1,700 sites amid the lockdown.
It has furloughed 99% of its employees, with basic pay for all its employees – including board members – reduced to between 60% and 80%, depending on how senior they are.
The group also said its costs have been slashed to the minimum necessary to keep the estate of pubs and restaurants secure and safe.
It added it has sufficient funding that should see it “well into” the second half of the year
But shares in the group tumbled as much as 12% despite its assurances as it warned about uncertainty over the length of the UK coronavirus lockdown.
The group said: “Great uncertainty remains not only as to the extent of the current shutdown but also the profile of any reopening and recovery period back to normality.”
Revolution Bars was enjoying better fortunes as shares soared nearly a fifth, having jumped as much as 40% higher at one stage, as it said its lender NatWest had agreed an extension to its borrowing limits.
The group, which has furloughed 98% of its workforce, said it has been able to extend its credit facility by nearly £10 million to £30 million until the end of August, when it will reduce to £24 million.
NatWest will also waive all the group’s financial covenant tests at March and June, Revolution Bars said.
The group said it had been able to cut its weekly running costs to around £400,000 after actions including halving the pay of senior bosses and board members, including the chief executive.
It has also agreed rent relief with landlords.
Rob Pitcher, chief executive of Revolution Bars, welcomed support from NatWest, staff, suppliers and landlords.
But he called on the Government to do more to help the sector and offset the property costs faced by bar chains and their landlords.
He said: “There is still more which needs to be done to ensure the protection of the 3.2 million jobs in our sector along with the £39 billion of direct tax receipts paid annually to the UK Government.
“Specifically, this includes more support in connection with property-related costs during this enforced closure period and beyond, including support for landlords themselves and we encourage the UK Government to take swift action in this respect.”