Mitchells & Butlers' debt grows as deal with Robert Tchenguiz is delayed

O'Neills and All Bar One operator Mitchells & Butlers (M&B) said today that its debt relating to a delayed joint property ownership scheme with Robert Tchenguiz's investment vehicle R20 had risen to £140m.

Prospects of a joint venture for property ownership were first raised on 22 May, with M&B selling a 50% stake in £4.5b of property - about 1,300 pubs and £240m in rent.

However, the two sides announced they were putting the deal on hold in August because of market uncertainty.

In order to increase the chances of the deal going ahead, M&B and R20 entered into a number of debt-hedging arrangements designed to contribute to the joint venture.

This deficit stood at £60m in July but has now risen to £140m. M&B said the debt did not reflect a cash loss but that the current lack of liquidity in the market "meant that the transaction could not be implemented".

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By Christopher Walton

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