Newspaper article The Evening Standard (London, England)

Citi Warns of a Grim Night out at the Pub for Years

Newspaper article The Evening Standard (London, England)

Citi Warns of a Grim Night out at the Pub for Years

Article excerpt


THE smoking ban, competition from the supermarkets and a general lack of cash in people's pockets are continuing to take a heavy toll on the UK's big pub operators and restaurant chains.

Citigroup says there is little prospect of things improving for the landlord of your friendly local in 2009. In fact, it reckons trading conditions are likely to continue deteriorating. "We believe the proximity to restrictive cash flow tests means shareholders may have no rights on some cash flows for years if trading deteriorates, even if a covenant breach is averted," it said.

Citigroup has chosen to downgrade Punch Taverns, down 41/4p at 72p, from hold to sell and slashed its price target from 200p to 60p. It has cut its target on Enterprise Inns, 1/2p firmer at 68p, from 220p to 90p, Greene King, 3/4p better at 4693/4p, from 625p to 525p and Mitchells & Butlers, 53/4p up at 188p, from 275p to 225p, but continues to rate all three a buy.

Over the weekend, Tim Martin, the chairman and founder of the JD Wetherspoon pubs chain, complained that private equity companies had saddled some of the pub chains they owned with too much debt.

Share prices generally traded a touch firmer for choice following last week's shake-out. But trading conditions remained desperately thin with the FTSE 100 index rising 7.8 to 4456.3.

Banks were marked higher with Royal Bank of Scotland gaining 1.9p to 55p and Lloyds TSB 4.5p to 136p.

Shares in the London Stock Exchange rose 19p to 587p. This was in spite of Chi-X Europe, the electronic market launched in 2007 to compete with European stock exchanges, warning that fourth-quarter trading volume dropped 7% in the wake of recent financial-market turmoil. Share volume declined to 24.8 billion from the previous quarter, while the total number of trades rose 12% to 29.4 million.

Chi-X has the largest market share in Europe among alternative trading platforms Turquoise, Nasdaq OMX Group and Bats Trading. It is backed by a consortium of investment banks, led by Goldman Sachs.

Last week, the LSE reported that the total number of trades on the equity order book reached 263 million, an increase of 25% on 2007. …

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