* M&B to raise 350 mln pounds through open offer
* Open offer at discount of 36% over last close
* M&B says agrees 150 mln pounds in new credit lines
* Shareholders form majority consortium
* Shares up nearly 6% (Adds shares, analyst comment, details debt, open offer)
Feb 15 (Reuters) - Britain’s Mitchells and Butlers moved to raise 350 million pounds ($486 million) in fresh equity and 150 million pounds in new credit lines on Monday to see the Harvester, Toby Carvery and All Bar One owner through the coronavirus crisis.
Mitchells and Butlers, whose around 1,600 managed freehold pubs are predominantly in Britain, said in January it may need to raise fresh funds as the country’s latest coronavirus lockdown once again shut its pub and restaurants.
Shares in M&B, which also said in a statement that it had agreed on amendments and waivers with its creditors to avoid covenant breaches, rose 5.5% to 346.7 pence by 1046 GMT.
The pub operator said Piedmont Inc, Elpida Group and Smoothfield Holding, which own around 55% of M&B, had formed a consortium called Odyzean to become its majority shareholder and would take up the new share issue if other investors did not.
“Without this major equity injection, the prospects for the business, its 1,600 venues, and over 40,000 UK employees would be bleak,” an Odyzean spokesperson said.
Stifel analyst Mark Irvine-Fortescue said the move by Odyzean could raise expectations of M&B being taken private.
Others in the hospitality industry, which has been hit hard by lockdowns in Britain during the coronavirus crisis, have also had to turn to shareholders to get by. Last month Wetherspoons was forced into a second cash call.
M&B’s combined credit score, which measures how likely a company is to default in the next year on a scale of 100 (very unlikely) to 1 (highly likely), was “5” as of Monday, Refinitiv Eikon data showed.
Odyzean said it will take excess shares not taken up by other shareholders and it was “fully supportive” of M&B’s management but intends to review the board, which could reduce the number of non-executives.
M&B will issue about 167 million new shares to existing shareholders at a subscription price of 210 pence per share, representing a 36% discount to the stock’s last closing price.
The company had net debt of 2.1 billion pounds according to its annual report and a market capitalisation of 1.41 billion pounds ($1.96 billion). Its unsecured borrowing facilities of 250 million pounds fall due for repayment in December 2021. ($1 = 0.7190 pounds) (Reporting by Tanishaa Nadkar in Bengaluru; Editing by Devika Syamnath and Alexander Smith)