M&B boss out on hedge loss
THE BOSS of Britian’s biggest pub chain Mitchells & Butlers (M&B) resigned yesterday after the company revealed it would lose a further £69m in a disastrous bet on interest rates and revealed a 48 per cent fall in pre-tax profits to £44m for the six months to 11 April.
Chief executive Tim Clarke, stepped down “as a matter of principle,” chairman Drummond Hall said, adding that he felt his position was “untenable” and left by “mutual consent”.
The role will be filled by Adam Fowle, the chief operating officer, on a temporary basis while a full time replacement is sought. While Fowle is seen as the likeliest candidate for the permanent job, Carl Leaver, the former head of M&S’s overseas operations, who resigned from the role this week, is also being tipped by analysts as a potential candidate.
The company has already written off £274m due to the huge bets on long term interest rates and inflation. The controversial hedging arrangements were put in place in 2007 in a bid to secure the best terms for a planned £4.5bn property sale and leaseback – a move led by real estate entrepreneur Robert Tchenguiz who at that stage had a 25 per cent stake in the business. The financial crisis meant the project was cancelled leaving M&B with huge losses.
M&B had been rumoured to be considering a rights issue to bolster its balance sheet. However, it is thought to have ruled out such a move for now.
The group yesterday said it had seen an improving trend in recent trading with like-for-like sales up by 1.5 per cent in the 16 weeks to 16 May and market share gains.