A joint property ownership venture between Mitchells & Butlers and Robert Tchenguiz's investment vehicle is unlikely to go ahead unless the market for debt improves, the pub group said today.
Prospects of a joint venture for property ownership were raised on 22 May. Since then a deal, which would have seen the sale of a 50% stake in £4.5b of property, comprising approximately 1,300 pubs and £240m in rent, has been hammered out.
But today M&B said: "It is now not possible to execute the joint venture due to the current disruption of the debt markets which has resulted in a significant widening of credit spreads."
However, the All Bar One operator has not ruled out the deal entirely and insists it is still the best route for it to release equity from their property portfolio.
In order to increase the chances of the deal going ahead, M&B and R20 have entered into a number of debt hedging arrangements which will contribute to the joint venture.
Meanwhile, M&B said that the combined effects of the introduction of the smoking ban in England, along with less than seasonal weather, had not had a discernable impact on their trading for the 11 weeks ending 28 July.
As a result sales for the period were up 3.5% on a same outlet basis, with a marginal movement in sales towards food, but the group insisted it was still too early to drawn any definitive conclusions about the impact of the ban.
By Christopher Walton
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