M&B takes a £274m hit after rates-bet fiasco

My Account
Logout

Create an Evening Standard Account

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Welcome! Sign in here

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Forgot your password ?

Registration

* indicates fields that are mandatory

Email *

Password *

Confirm Password *

First name *

Surname *

Postcode *

Country *

Mobile phone number

Username *

Gender *

Year of birth *

When you sign up...

You will have access to all our online competitions, discounted offers and can post comments on our site.

You will also receive The Weekender newsletter sent every Thursday - it’s full of fantastic offers and ideas for the weekend. You can update your email preferences in your account page when you log in.

Other newsletters and emails

Homes & Property Newsletter - Yes I want to receive the weekly email with all the latest news on property in the capital

Occasionally we would also like to send you relevant emails detailing specific offers either from ourselves or carefully selected partners. If you would prefer not to receive these then please tick the appropriate boxes below. We will never pass on your details.

I do not want to receive additional offers and information from the Evening Standard

I do not want to receive additional offers and information sent by Evening Standard on behalf of carefully selected partners

Terms and Conditions

* I have read, understood and agree to be bound by the terms and conditions of Evening Standard

Registration

Mail Sent for Registration Confirmation.

A confirmation email has been sent. Please activate your account by clicking on the activation link sent in your mail box.

The group behind All Bar One and O'Neill's is paying the price for tangling with Robert Tchenguiz, the property tycoon who is reeling from losses on his three most high-profile investments.

Last year Tchenguiz persuaded M&B to split off its property arm to rake in rental income.

The deal required M&B to issue bonds and bankers said the company needed to take out hedges against inflation and the chance that interest rates would rise before the bonds could be parcelled up and sold. As the credit crunch bit the deal fell apart, but the hedges remained in place and have spiralled into the red.

Today M&B said it was closing the positions, a decision likely to provoke derision among analysts and investors who always doubted the wisdom of the scheme. The shares fell 5½p to 387½p.

Finance director Karim Naffah has resigned with immediate effect. Chief executive Tim Clarke also offered his resignation, which was refused by the board, but there are serious doubts that he has the confidence of investors. None of the directors will get a bonus this year.

Tchenguiz, who is nursing losses of around £500 million on his holdings in M&B, J Sainsbury, and computer games group SCi, has upped his stake in the pubs company by 3% to 22%.

M&B blamed the credit crunch, but also hinted at less-than-stellar advice from banks - believed to be Citigroup and Royal Bank of Scotland. The firm, which owns 2000 pubs, said it had begun a "strategic review", suggesting it is up for sale. Before Christmas there were rumours of tentative merger talks with Punch Taverns.

M&B is also coping with a tough business environment. In the 17 weeks to 26 January like-for-like sales edged up 0.7%. A statement today said trading conditions "are set to remain highly challenging" and that the board "very much regrets" the loss from the hedges.

Clarke said plans to spin off the properties into a Real Estate Investment Trust had been shelved. Asked if he had the support of the City, he replied: "We will be putting our case today."

Jeremy Townsend, the deputy finance director, will step up to replace Naffah.