Mitchells & Butlers suspends pension contributions until April

Mitchells & Butlers (M&B) has suspended payments to its staff pension schemes amid pandemic pressure, with the restaurant company delaying contributions due between January and March.

M&B, which runs locations of restaurant, pub and bar chains such as Harvester and All Bar One, said it had agreed to delay the payments with the schemes’ trustees and confirmed that it had also suspended all “non-essential capital expenditure”.

The three months of delayed payments into the schemes will become due in April 2021.

In May 2014 the company had agreed to a schedule of deficit recovery contributions under a 10-year recovery plan to help reduce its DB pension funding deficit of £572m, with its contributions rising in line with the Retail Price Index but with a 5 per cent cap.

To help it navigate the pressures of the pandemic, the group also has securitised debt servicing costs of £51m per quarter, with the next payment due on 15 March.

All 1,600 of the company’s venues remain closed, with its UK locations having been shut since 30 December due to new Covid-19 restrictions and its German businesses having been shut at the beginning of November 2020.

This came as the company announced that cash burn was estimated to average at between £30m and £35m per four-week period since the start of 2021.

The company announced last week that it intends to raise £350m by way of an open offer, with the board stating in M&B’s latest update that this was “critical for the continued operation and financial stability of the group, for managing the business through the current pandemic and, ultimately, to deliver long-term, sustainable growth to Mitchells & Butlers' shareholders”.

M&B chief executive officer, Phil Urban, commented: "M&B was a high performing business coming into the pandemic and with the support of our main stakeholders, including the equity injection from this open offer, we have every confidence that we can emerge in a strong competitive position once current restrictions are lifted.

“The hospitality industry has done everything that has been asked of it to date and, now that the vaccines are being rolled out and infections are dropping, we are hopeful that pubs and restaurants will soon be allowed to reopen safely so that we can start to serve our customers again."

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