- New bank facilities extended to January 2025
- Good progress on back to a billion strategy
- Shares trade at big discount to net asset value
Pubs group Marston’s (MARS) said it has successfully amended and extended its borrowing facilities to the end of January 2025 giving it greater headroom while trading is in line with expectations.
Investors welcomed the news pushing the shares up 3% to 36.6p but they remain down over 50% over the last year.
The revised facility of £340 million is comprised of a £300 million revolving credit facility including two new banks and a restatement of the current £40 million of private placement notes. This replaces the £280 million facility and extends the maturity due in 2024.
The cost of the facility is variable and linked to the amount of leverage and changes to the reference SONIA (Sterling overnight index average) rate. Part of the facility (£120 million) is hedged against adverse interest rate moves.
BACK TO A BILLION
The company said it continues to make progress on its ‘back to a billion’ strategy, which aims to get net debt below £1 billion and grow revenues back to £1 billion by 2026.
Leisure analyst at Shore Capital Gregg Johnson points out that net bank debt stood at £183 million at the end of September 2022 while total debt including securitisations and long-term property leases stood at £1.21 billion.
Johnson is forecasting total net debt to fall to £1.1 billion by the 2024 financial year. (Marston’s has a year end of 1 October).
CHRISTMAS SALES JUMP 16%
Trading in the 16 weeks to 21 January saw total sales jump 16% year-on-year. Recent peer updates have been supportive of the encouraging start to the year with JD Wetherspoon (JDW) also seeing good growth suggesting a resilient consumer.
For the year Johnson expects 2023 sales to increase 8% producing operating profit of £130 million and a £10 million contribution from CMBC (Carlsberg Marston’s beer company), all of which results in a pre-tax profit of £52 million and earnings per share of 6.9p.
The current share price implies the shares trade on 5.3 times 2023 expected earnings while Johnson notes the shares are below 0.4 times net asset value of 102p per share.
