Marston’s secures waiver against financial breaches during shutdown

The waiver issued by HSBC applies to Marston’s cessation covenant and means that the Wolverhampton-based operator of around 1,400 pubs will be able to fully suspend its business for 30 days without defaulting.

The operator’s nationwide network of sites under brands including Pitcher & Piano, have been closed since 20 March when Prime Minister Boris Johnson called on pubs to close in light of the coronavirus outbreak.​

Described as a “precautionary measure” by the FTSE 250 pub operator, the waiver will apply until 29 May initially though an automatic extension may be triggered until 15 June in “certain circumstances”. 

In a statement issued on 20 April, Marston’s explained: “We continue to take an extremely prudent approach in our management of the business during this period of unprecedented uncertainty, the timescale of which remains unclear pending further guidance from the UK Government as to how, and when, the current state of much reduced social activity can be relaxed and pubs allowed to reopen.”

As reported by The Morning Advertiser ​(MA​) in October 2019, Marston’s revealed net debt of £1.39bn​ in a trading statement for the year ending 28 September 2019, with the reduction of this figure described as the company’s “principal focus” by chief executive Ralph Findlay. 

In keeping with plans to slash its net debt by £200m by 2023 by increasing disposal values from £40m to £70m for the current financial year, Marston’s agreed the sale of 137 pubs to Admiral Taverns​ in November 2019 as well as a deal to offload 29 pubs to Hawthorn Leisure​ in January 2020.

News of Marston’s waiver follows a similar announcement by Birmingham-based operator Mitchells & Butlers, which announced a temporary waiver until 15 May to prevent the operator of 1,700 pubs from breaching lending agreements.​

Response to rent questions

At the time of writing, Marston’s is among five of the six companies regulated by the pubs code – Ei Group, Greene King, Punch, Star Pubs & Bars and Marston’s – that have elected to defer rather than cancel rent during the Covid-19 shutdown. 

However, on 14 April, MA​ reported that the employer of more than 14,000 staff members, had rebuked claims by the Campaign for Real Ale (CAMRA) that the pubco and brewer is doing too little to financially support its tenants​ and licensees during the coronavirus lockdown.

In a written response to CAMRA, Marston’s chief executive Findlay explained that none of the pubco’s tenants and licensees were currently paying rent and that it had made clear to tied tenants and lessees that it expected to have “constructive discussions” about future rents, including provision of rent concessions where appropriate.

Along with the other five companies regulated by the pubs code, Marston’s signed a joint declaration to protect tenant rights​ after informing pubs code adjudicator Paul Newby that they are unable to uphold duties during the Covid-19 emergency.

These include serving compliant rent proposals, rent assessment proposals and market-rent-only (MRO) option full responses.