Whitbread, the British owner of Premier Inns, Costa Coffee and Beefeater pubs, blamed turmoil in credit markets as it shelved plans for a 600 million pound ($1.2 billion) bond to fund a cash return to investors.
Whitbread shares rose, however, as it reported a strong rise in first-half sales on August 29. Its fast-growing Premier Inn budget hotel and Costa Coffee chains drove a 6.6 percent growth in like-for-like sales in the 24 weeks to August 16 and an 8 percent rise in the second quarter.
Margins also improved thanks to better occupancy rates at Premier Inn and rising food and coffee sales at Beefeater, Costa and Brewers Fayre. The group said it would start a 300 million pound share buyback programme using existing cash but that the crisis in the credit market had forced it to rethink plans for a further cash return funded by an asset-backed bond. "Given the uncertainty around pricing and how much one would actually get out of the capital markets, we have decided to revisit (the asset-backed bond) once there is a clearer line of sight," said Finance Director Chris Rogers.
"The debt markets are extremely uncertain at the moment, and the propensity to lend to anything other than a sovereign government is pretty low," he added. It recently raised 925 million pounds through the sale of the David Lloyd health clubs and is planning to use this to repay existing debt.
A string of high-profile debt-dependent deals have run into trouble in recent weeks, while the credit market has been spooked by a potent cocktail of US housing market fears, a leveraged loan logjam and potential hedge fund losses. Whitbread said it would give investors an update on its cash return plans in October, although it was at the mercy of the credit market.
Whitbread shares, which have risen around 12 percent in the last 10 days, gained 3.4 percent to 1,611 pence by 1357 GMT on the buoyant sales figures.
Comments
Comments are closed.