M&B puts R20 joint venture on hold

August 2, 2007: Mitchells & Butlers has put a proposed joint venture with R20 — the property vehicle of businessman Robert Tchenguiz — on hold until market conditions improve.

Since May 22 substantial progress has been made on structuring a deal with R20 based on the sale of a 50% stake in a £4.5bn property joint venture comprising approximately 1,300 pubs and £240m of rent.

Until the current market turbulence, Mitchells & Butlers and R20 have been in final negotiations with banks to finance the transaction. However, the Mitchells & Butlers board now believes it is 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.

Discussions will continue with R20 to enable the transaction to be implemented when debt markets improve.

Mitchells & Butlers also announced today that like-for-like sales for the 11-week period up to July 28 were up 3.5% on a same outlet basis and up 2.2% on an uninvested basis.

"Although these results are, as expected, partly assisted by weaker comparatives within the restaurant division as a result of last year's World Cup, they represent a resilient performance during a period of prolonged poor weather conditions," said an M&B spokesperson.

"The first weeks of the smoking ban in England have seen minimal discernable impact on the overall sales trend, despite the sharply differing weather comparatives against last year.

"There has been a marginal movement in the sales mix towards food, but this will also have been weather related. At this time, it is too early to draw any definitive conclusions from the limited period of the ban so far."

4 Comment on this story at our forum