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(Alliance News) - Auto Trader Group PLC on Wednesday said it will conduct a share placing to give its balance sheet a boost and added that its board members have decided to give up half their salaries as the car marketplace bids to save costs during the Covid-19 outbreak.
The FTSE 100 firm will place up to 46.5 million shares through a bookbuild which kicks off on Wednesday. Auto Trader said the pricing will be determined by the company and Bank of America Corp, which is acting as the bookrunner.
Shares in the company were down 4.6% at 419.00 pence each early on Wednesday morning in London. Based on this share price, it will secure up to GBP194.8 million through the placing.
Auto Trader said: "The net proceeds of the placing will be used to strengthen Auto Trader's balance sheet and liquidity position, support all stakeholders, increase our flexibility to take advantage of future opportunities, and increase certainty around meeting covenant tests in future years. Furthermore, this equity raise will allow us to resume our existing capital return policy at the earliest prudent opportunity."
On its trading, the company said its results for the year ended March 31 will be "broadly in line with the market consensus", but it cannot provide guidance for financial 2021 due to uncertainty caused by the virus crisis.
Auto Trader said: "The entire board has voluntarily offered to forego at least half of their salaries or board fees for the foreseeable future. The executive directors have also requested that their annual 2020 bonus be waived.
"We have announced a furlough programme to our employees which will take effect shortly. We intend to fully top up salaries for the large majority of those who are impacted. The company is supportive of the government's goal of trying to keep as many people as possible in work."
The company had previously said it will suspend further share buybacks, and it added on Wednesday that while no decision on a final dividend has been made, it is unlikely to declare one.
Auto Trader added that it saw a record number of vehicles being advertised on its site after it announced it would it not be charging retail customers for advertising packages during April, and would be allowing customers to defer March advertising costs by 30 days.
Auto Trader said 540,000 vehicles were advertised on the site at March 31, a 13% rise from 480,000 in the year before.
At the moment, car retailers are closed, after lockdown measures were imposed by the UK government.
"The group's balance sheet is strong. At the end of February, we had drawings of GBP289 million on our GBP400 million revolving credit facility," Auto Trader said.
By Eric Cunha; ericcunha@alliancenews.com
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