M&B CEO quits as swap losses unveiled

By Matt Scuffham

LONDON (Reuters) - Mitchells & Butlers Chief Executive Tim Clarke resigned on Thursday after the pubs firm revealed it had taken a 69 million pound hit closing out a debt position, sending its shares down 11 percent.

The group, which owns the All Bar One and Harvester chains and has about 2,000 pubs, paid the sum to realise the cash costs on a long-term interest rate swap.

The facility had been put in place in 2007 ahead of a planned split into separate operating and property companies which had been lobbied for by entrepreneur Robert Tchenguiz who, at the time, held a 25 percent stake in the business.

Clarke had previously offered to resign in January 2008 after M&B said it had lost 274 million pounds closing similar hedging arrangements.

At that time, the offer was rejected by M&B's board but the unveiling of further losses proved to be the final straw.

Chairman Drummond Hall told reporters on a conference call that the board had, on this occasion, accepted the decision with "great regret."

"Tim Clarke felt it was right he should offer his resignation as a matter of principle. He felt his position had become untenable. The board, reluctantly, agreed that was the right decision," he said.

Shares in M&B were down 8 percent to 240 pence at 10:00 a.m., the biggest mid-cap faller, having been as low as 233.75 pence.

"The announcement of more swap losses and the resignation of the group's CEO are unlikely to go down well with investors," said Blue Oar Securities analyst Mark Brumby.

"The group has lost around 500,000 pounds of shareholders' money on the ill-fated financial instrument and has lost its chairman, CEO, and CFO since losses were first announced," he added.

Clarke became chief executive of M&B in 2003, after the business was created when Six Continents Plc demerged its pubs and hotels division into two separate entities -- M&B and InterContinental Hotels Group.

He will receive a payoff equivalent to one year's salary of 573,000 pounds and "associated bonuses," Hall told reporters.

Chief Operating Officer Adam Fowle has been appointed acting chief executive and Hall told reporters he is a strong contender to take the job on a permanent basis.

"We have a very strong internal candidate which is why we've had the confidence to put him into the role. Adam's got considerable experience as a retailer both in the pubs sector and in the food sector," he said.

Fowle rejoined M&B in 2005, following a two-year stint as retail director at J Sainsbury, having previously spent 17 years with the company in various roles and analysts viewed his appointment positively.

"Fowle is a very capable replacement even if it's just on a temporary basis," said Investec Securities analyst Douglas Jack.

M&B reported a 48 percent decline in first half pretax profit to 44 million pounds, ahead of the consensus forecast of 41 million pounds, according to a Reuters Estimates poll of three analysts.

The group reported an improving trend in recent trading with like-for-like sales up by 1.5 percent in the 16 weeks to May 16.

(Editing by Simon Jessop)

Article Published: 21/05/2009