Securing our future through ongoing action and revision
In September 2006, we raised £1.1bn via a bond issue to increase our securitised debt by £655m to £2.46bn and refinance existing Floating Rate Notes of £450m. The current cash interest cost is 6.1%.
The pubs within the securitisation are owned by Mitchells & Butlers Retail Limited, a 100% owned subsidiary of Mitchells & Butlers plc which has a financial year end of end September in line with the Group. The performance of the securitisation pubs is reported half yearly on a quarterly basis in line with Mitchells & Butlers plc Interim and Final results in May and November respectively.
On 12 June 2020, the Group announced revised financing arrangements that had been agreed with our main creditors to provide a platform of both additional liquidity and improved financial flexibility in order to meet the challenge presented by Covid-19. This is represented by £100m of CLBILs and revolving credit facilities of which £10m was drawn at the balance sheet date.
In addition, as part of the revised financing arrangements, certain amendments and waivers were agreed within the Group securitisation to provide stability and flexibility to the Group in order to manage the Secured Financing structure. These arrangements are summarised in the notes to the accounts.
In securing these valuable amendments the Group has agreed not to pay an external dividend, undertake any share buy-backs or repurchase bond debt until the end of the financial year to September 2021, at the earliest.
What is securitisation?
Securitisation is a way of raising finance secured on identifiable cashflows from a particular set of assets. Almost any assets that generate a predictable income stream can be securitised.
A ‘whole business securitisation’ is a term used to describe a securitisation where the cashflows derive from the entire range of operating revenues generated by a whole business (or a segregated part of a larger business). These have been used by a wide variety of businesses to raise finance i.e., Welcome Break, Road Chef, Westminster Healthcare, London City Airport, the Tussauds Group and many pub companies.
There is no formula that determines whether a business is suitable for securitisation. However, in whole business securitisations, the businesses in question produced stable, predictable cashflows.
Ratings agencies determine whether they believe that the income levels generated from the assets can be maintained by stress-testing the ability of the company to continue to generate revenues through different economic and market dynamics.
In order to protect the quality of the assets in the business, a securitised company generally agrees or ‘covenants’ to maintain the assets to a certain standard, and not to sell the assets without consent. In addition, the Company generally agrees to use the cashflows generated by the assets in the first instance to pay the interest on the debt as well as to meet the repayment obligations.
Classes of debt in MAB securitisation
Things are continuously changing, and we’re keeping a close eye on our business securitisation and debt – and keeping you informed along the way.
Key terms of our securitisation
From debt service and dividends all the way to net worth, find out everything you need to know about the key terms used within our securitisation at Mitchells & Butlers.
Learn more about the bonds of Mitchells & Butlers and their legal amortisation profiles. Our 2020 summary is also available to download, if you’d like to keep a copy.
Announcements and presentations
Anything you need relating to the various announcements and presentations of Mitchells & Butlers – including the Interim Investor Report and Financial Compliance Certificate – can be found here.
Chief Financial Officer
Amy De Marsac
Head of Investor Relations & Sustainability
Deputy Company Secretary