Hotel owner MWB to raise fresh funds to prevent breach of banking covenant

MWB, THE property investment group which owns the Malmaison and Hotel du Vin hotel chains, yesterday announced plans to raise £27.5m via a share placing to mitigate the impact of the recession on its empire.

The group said it would issue 91.7m new shares in the placing at a price of 30p per share – a 32.6 per cent discount to Wednesday’s close of 44.5p. It will be subject to approval by investors at a meeting on 11 January.

MWB, which also owns luxury department store Liberty’s, warned in the statement that there was a “material risk” of the group breaching one of its gearing covenants if the placing were not to succeed. It also said there was a more remote risk of a funding shortfall by May next year after the group to a hit from challenging market conditions in the recession.

It said £7.5m of the proceeds would go towards purchasing for cancellation stock held by Audley Investors, with the remainder earmarked for paying down some of its debt.

Chief executive Richard Balfour-Lynn, the hotelier tycoon who founded the group in 1982, remained upbeat about the group’s prospects.

He said the fundraising would provide MWB with more financial flexibility in the short term and allow it to expand in the longer term, adding: “There is plenty of opportunity in the market at the moment given weak pricing levels, and we’re looking to capitalise on that.”


BROKER Panmure Gordon is acting as sponsor, financial adviser and broker to MWB on the £27.5m placing, which it has fully underwritten.
The team advising on the placing was led by Hugh Morgan and Adam Pollock, backed up by Giles Stewart and Callum Stewart.

Investment banker Morgan joined Panmure – headed by chief executive Tim Linacre – in 2001 from UBS Warburg, where he had worked for around six years as a director in the mid-market corporate finance team.

Pollock, a managing director in corporate broking at the firm, joined last year from now-bust property and financial services group Dawnay Day, where he was co-chief executive of its investment banking division. In total, Pollock has spent over 20 years in the broking arena, having also previously worked for the likes of Deutsche Bank, Hoare Govett and Lazard.

Giles Stewart has been at Panmure for four years, having rejoined the firm – which used to be WestLB Panmure, before being spun out of its German parent into Lazard and then sold off a little over a year later – after taking time out to do an MBA.
Callum Stewart has worked at the firm for just over 3 years.