PBR shares plunge after cash warning

Dec 18 2008 by Graeme King, The Journal

SHARES in leisure firm Premium Bars & Restaurants plunged more than 30% yesterday after the company revealed that its banks have asked it to raise more funds to improve its cashflow.

PBR, which recently moved its headquarters to Manchester from Newcastle where it was founded 21 years ago, is now valued at just £1.24m despite possessing freehold property worth tens of millions of pounds – such is shareholders’ concern about the company’s position.

In May, PBR shares were trading at just under 140p, but have since dived and are now worth just over 3p each.

The company owns high profile assets in Newcastle, including The Living Room on Grey Street, the Blue Bambu nightclub on the Bigg Market, and the Waterside hotel on the Quayside.

The Royal Bank of Scotland is known to have been backing PBR, formerly Ultimate Leisure, and is believed to have allowed the company to sustain more than £40m of debt.

But now the Edinburgh-based bank, which has recently seen a majority stake taken by the Government, is asking PBR to find new investment to cover its short term cash needs.

PBR said while it was confident of raising extra capital, if this was not possible the board “cannot be certain of the continuing support of the company’s banks.”

Yesterday, its new chairman Charles Williamson said: “We are still in discussions with RBS and have not arrived at a conclusion. What they are suggested is we include other stakeholders. There are half a dozen parties for us to talk to. I have every confidence we will be able to access funding from those sources. We are looking forward to the next 10 days which will be very busy.”

Mr Williamson said PBR could also consider some asset disposals, since the company holds some desirable property around the country, though prices have fallen in recent months.

He said: “We have freeholds – some very high quality assets. We are always reviewing the estate, and will continue to, particularly with regard to under performing assets.”

Overall, the chairman said PBR was seeing weekend trade in its outlets being sustained, but was struggling to generate revenue on weekdays.

Andrew Miller, head of Barclays Wealth stockbrokers in Newcastle, said: “People are being a lot more cautious in their spending. The leisure companies’ top month is December, and a lot of analysts felt operators would survive OK into 2009, but it’s clearly very tough out there.”

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