Mitchells & Butlers is looking to raise £350m from its largest investors, as pubs and bars remain shut across the UK.
It will issue about 167 million new ordinary shares with a subscription price of 210p per share.
The group – which owns All Bar One, Toby Carvery and Harvester – stated that a consortium of three of its largest investors will be able to make the whole £350m available.
Piedmont, Elpida Group and Smoothfield have joined forced to create a new holding company, Odyzean, holding 55% of the company.
Odyzean said it is supportive of the current management team, but that it plans to review the current composition of the board of directors.
A spokesman said: “Without this major equity injection, the prospects for the business, its 1,600 venues, and over 40,000 UK employees would be bleak.
“Our significant financial commitment will help to secure the future of the business and provide a platform for the strong management team to restore the company’s operations to good health when circumstances allow.”
Mitchells & Butlers also told investors that it has secured an agreement with banks for a new £150m credit facility as part of the financial shake-up.
Last month, the pub owner said it had only £125m in cash reserves and was burning through between £35m and £40m each month its sites remain shut.
Chairman Bob Ivell said: “Mitchells & Butlers was a high-performing business going into the pandemic and this capital raising and refinancing will provide the business with the certainty of funding that it needs in order to emerge in a stronger position to take advantage of its strong property portfolio, well known brands and operational expertise in order to win market share and continue its long-term strategy of deleveraging and driving value creation for shareholders.”
The group operates more than 1,700 pubs and bars across the UK – 83 of which are located in Scotland.
Separately, the chairman of pub chain Wetherspoon has called on the UK Government to open pubs at the same time as non-essential shops.
Tim Martin warned that the pub industry is “on its knees” and needs to reopen to save jobs.
He said pubs make a massive contribution to the economy, with Wetherspoon alone paying about £10 of tax for every pound of profit it makes.
“In the financial year to July 2019, before the pandemic, Wetherspoon, its customers and employees generated £764 million of taxes – £1 in every thousand collected by the UK Government,” he commented.
“Many people have correctly pointed out that the three lockdowns of the last year have been a disaster for the hospitality, retail, arts and entertainment industries, but our calculations show that they have been an even bigger disaster for public finances.
“The taxes paid by Wetherspoon are mirrored by thousands of companies which have been annihilated by lockdowns – as a result, government finances have been annihilated even more.”
Martin said Wetherspoon has registered more than 50 million customer visits to its pubs, using the Test and Trace system, without a single outbreak of Covid-19, as defined by the health authorities.
“Surely it is possible for the hospitality industry to reopen at the same time as non-essential shops, now that a vaccine exists, on the basis of the social distancing and hygiene regulations,” he added.
“Unless the industry does reopen on that basis, economic mayhem will inevitably follow.”