Business
Disposal of 52 Lodges
Disposal of 52 Lodges.
About this update from Mitchells & Butlers Plc
[{"type":"text","content":"\n RNS Number : 4095P Mitchells & Butlers PLC 15 July 2010 \n \n\n15 July 2010\nMitchells & Butlers plc\n \nDisposal of 52 lodges\n \nMitchells & Butlers announces the disposal of the majority of its lodge business and the sale and leaseback of eight pubs for a gross cash consideration of £91m. \n \nThe transaction incorporates the sale of approximately 2,000 rooms in 52 lodges, all of which are adjacent to Mitchells & Butlers' restaurants and pubs, and has three elements:\n \n· Travelodge has entered into a 25 year agreement to operate and lease the 52 lodges; \n· the property interest in the lodges, with the benefit of the associated leases, will be sold for £75m. Contracts have been exchanged on 44 sites with PRUPIM and agreed heads of terms are in place with another property company for the remaining sites; and\n· the property interest in eight restaurants and pubs (that are inseparable from the lodge building) will be sold for £16m and leased back to Mitchells & Butlers. \n \nThe 52 lodges generated an EBIT of £9.5m for the year ended 30 September 2009 which represents an EBIT multiple of 7.9x on the gross lodge proceeds. The net book value attributable to the 52 lodges is £93m.\n \nIn relation to the sale and leaseback of the eight restaurants and pubs, Mitchells & Butlers has entered into 25 year leases at a net initial yield of 6.0%. The ongoing annual rental charge on these assets will be £1m which is 42% of their EBITDAR. The total net book value of the freehold and leasehold interest in these assets was £21m. The Board of Directors believe that the capital value of the leasehold interest remaining in Mitchells & Butlers would at least be valued at £5m although, in line with current accounting policy, this will not be capitalised on the balance sheet.\n \nAs part of the transaction, Mitchells & Butlers has agreed to make a one-off initial contribution of £3m to the rental charge for the lodges. Net proceeds of £88m will be used to reduce debt and to fund capital investment opportunities in Mitchells & Butlers' growth brands. \n \nThe transactions with Travelodge and PRUPIM are expected to complete on 10 August 2010. ...