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(Alliance News) - easyJet on Thursday said it is planning to raise GBP1.2 billion in a fully underwritten rights issue in order to emerge from the pandemic on the front foot.
The budget airline added that it recently rejected an unsolicited preliminary takeover approach. The bidder has since confirmed it is no longer eyeing the company.
"The indicative proposal took the form of a low premium and highly conditional all-share transaction which, in the board's view, fundamentally undervalued the company. In deciding to reject it, the board took into account all relevant factors including the highly conditional nature of the proposal and the certainty and strategic opportunity that the rights issue presented to the company," said easyJet.
The carrier said the rights issue will help accelerate its recovery from the pandemic and provide it flexibility to pounce on investment opportunities.
Alongside the issue, it has secured new bank financing commitments to boost liquidity. It has agreed a new four-year senior secured revolving credit facility of USD400 million.
"Since the onset of the pandemic, we have undertaken decisive and robust action to restructure our operations, addressed our cost base and secured our financial position, keeping our investment-grade credit rating. We have worked hard to maintain our customer friendly brand and network and been rewarded with immediate growth in demand when travel restrictions have been lifted," said Chief Executive Johan Lundgren.
easyJet said UK domestic capacity in August was more than double pre-pandemic levels, while intra-EU capacity was at 81%.
It expects capacity in the fourth quarter to strengthen to 57% of pre-virus numbers, compared to just 17% in the third quarter, and sees first quarter passengers at up to 60% of pre-pandemic levels.
"This capital increase will allow us to build on our fundamental operational strengths and network strategy for our customers as well as accelerate long-term value creation for our shareholders," said Lundgren.
Shares in easyJet were down 5.2% at 748.00 pence in London early Thursday, the worst performer in the FTSE 250 in opening trade.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.1% at 7,016.96
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Hang Seng: down 2.2% at 25,732.60
Nikkei 225: closed down 0.6% at 30,008.19
DJIA: closed down 68.93 points, or 0.2%, at 35,031.07
S&P 500: closed down 0.1% at 4,514.07
Nasdaq Composite: closed down 0.6% at 15,286.64
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EUR: flat at USD1.1816 (USD1.1815)
GBP: up at USD1.3771 (USD1.3745)
USD: down at JPY110.04 (JPY110.40)
Gold: down at USD1,788.92 per ounce (USD1,791.85)
Oil (Brent): up at USD72.84 a barrel (USD72.35)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
13:45 CEST EU ECB interest rate decision
14:30 CEST EU press conference with ECB President Christine Lagarde
11:00 BST Ireland CPI
08:30 EDT US jobless claims
10:30 EDT US EIA weekly natural gas storage report
11:00 EDT US EIA weekly petroleum status report
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UK Prime Minister Boris Johnson has secured MPs' backing for his controversial GBP12 billion tax hike to pay for health and social care despite a series of Tories refusing back the measure. The House voted by 319 to 248 in favour of the 1.25 percentage point increase in national insurance contributions amid deep unhappiness among many Conservative MPs. Five backbenchers voted against the measure while another 37 did not vote – although not all would have deliberately abstained, as some would have had permission to be away from Westminster. The five rebels included former cabinet ministers Sir John Redwood and Esther McVey along with Sir Christopher Chope, Philip Davies and Neil Hudson. Another five – Jake Berry, Steve Baker, Dehenna Davison, Richard Drax and Sir Roger Gale – indicated that they were deliberately abstaining.
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China's factory gate inflation jumped in August to a 13-year high, with data showing a surge in commodity prices as the global emergence from the pandemic sees demand picking up but supplies limited. The producer price index, which measures the cost of goods at the factory gate, rose to 9.5% last month from 9.0% in July, the National Bureau of Statistics said. The reading was above forecasts for 9.0% and is the highest since 2008, when the figure hit 10%. The surge was "affected by a rise in prices of coal, and chemical and steel products", NBS senior statistician Dong Lijuan said in a statement. Industries have seen "strong demand and tight supply overall", pushing up prices in coal mining, while earlier pick-ups in costs of crude oil and coal have weighed on other production costs.
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BROKER RATING CHANGES
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ODDO BHF STARTS ASTON MARTIN WITH 'NEUTRAL' - PRICE TARGET 2000 PENCE
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JPMORGAN RAISES CONVATEC TO 'OVERWEIGHT' ('NEUTRAL') - TARGET 272 (229) PENCE
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JEFFERIES CUTS DRAPER ESPRIT TO 'HOLD' ('BUY') - TARGET 1200 (967) PENCE
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COMPANIES - FTSE 100
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JD Sports Fashion is weighing an investment in online women's fashion retailer Missguided that could involve an outright takeover of the business, Sky News reported late Wednesday. According to Sky News, JD Sports is among a number of parties in discussions with Missguided's founder Nitin Passi and the company's advisers. The proposal is said to involve the acquisition of a controlling interest in Missguided, although it was unclear on Wednesday whether Passi was keen on a majority stake sale. Missguided, popular among Millennial and Gen Z shoppers, is being advised by bankers at Rothschild and is also understood to be talking to a small number of other prospective investors, Sky News reported.
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COMPANIES - FTSE 250
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Grocer Wm Morrison Supermarkets said its pretax profit in six months to August 1 fell 43% to GBP82 million from GBP145 million a year earlier. Pretax profit before exceptional items and adjusted for business rates relief a year earlier was higher, however, up 42% to GBP105 million and GBP74 million. Morrisons had GBP93 million in rates relief waived in the same period a year earlier. Total revenue, including fuel sales, rose 3.7% annually to GBP9.05 billion from GBP8.73 billion. Total sales excluding fuel were largely unchanged year-on-year at GBP7.55 billion. Direct Covid-19 costs fell to GBP41 million from GBP155 million. The company, which paid a 2.04 pence payout a year earlier, decided against a dividend due to it being under offer.
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Genus saw earnings rise in the first half of 2021. Revenue rose 4.2% to GBP574.3 million from GBP551.4 million a year earlier. Pretax profit was up 21% to GBP55.8 million from GBP46.3 million.
Genus lifted its payout by 10% to 32.0p per share from 29.1p. "Genus performed very strongly and made significant strategic progress in the 2021 fiscal year. The group continued to show its resilience during the Covid-19 pandemic and I would like to thank our people who have shown great dedication to our customers whilst navigating the many challenges that the pandemic has caused," Chief Executive Stephen Wilson added. However, Wilson warned "recent volatility in the Chinese porcine market" will only get worse. "As a result of this headwind, and despite an expected strong performance in the other areas of the business, we expect Genus's growth to be lower than our medium-term goal in the current year before increasing again in FY23," Wilson added.
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888 Holdings said it has entered a deal with Caesars Entertainment to acquire William Hill's non-US assets for GBP2.2 billion. 888 had said on Tuesday that it was in advanced talks for a deal. William Hill International includes 1,400 UK betting shops, as well as assets in Italy, Spain and the Nordics. "The acquisition will create a global online betting and gaming leader by bringing together two highly complementary businesses and combining two of the industry's leading brands. The Acquisition represents a transformational opportunity for 888 to significantly increase its scale, further diversify its product mix and accelerate the upward shift of its revenue growth profile," 888 said. "The combination of 888 and William Hill International is expected to deliver significant operating efficiencies, including pretax cost synergies of at least GBP100 million per year, leading to improved profit margins."
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COMPANIES - MAIN MARKET AND AIM
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Lookers reported "exceptionally strong" first half trading, even with showrooms closed throughout the first quarter. The motor retail and aftersales service provider reported revenue of GBP2.15 billion for the first half of 2021, up 37% on a year ago, while notching an underlying pretax profit figure of GBP50.3 million, swinging from a loss of GBP36.5 million a year ago. It added: "Trading during July and August remained strong, exceeding expectations, primarily driven by unprecedented used vehicle margins. Order take also remained robust and the Group has a strong order book for September and the remainder of 2021." It intends to resume dividend payments as soon as possible, and will review this when releasing full-year results. Separately, it said it has appointed Ian Bull as non-executive chair and Oliver Laird as chief financial officer.
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COMPANIES - GLOBAL
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Chinese authorities have ordered gaming giants Tencent Holdings and NetEase to end their focus on profits and cut content perceived to be breeding "effeminacy", as Beijing tries to direct youth culture, gender ideals and the reach of big tech. The move is the latest by authorities to tighten their grip on the embattled technology sector and sent shares in some of the industry's biggest names plunging. Officials on Wednesday summoned gaming enterprises including Tencent and NetEase, the two market leaders in China's multi-billion-dollar gaming scene, to discuss further curbs on the industry, which has already been ordered to limit gaming time to three hours a week. Among the new targets are media representations of men, which experts say are a cause for anxiety among the conservative, older generation of Communist Party leaders.
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Facebook has hit back at the UK's competition watchdog for suggesting it may force the company to undo its multimillion-pound takeover of Giphy, saying that provisional findings contain "fundamental errors". The Competition & Markets Authority previously said it might force the USD400 million acquisition to be reversed. But in a strongly worded response on Wednesday, the social media giant questioned whether such action would be viable or enforceable. The CMA said that Facebook could use the takeover to deny other social media platforms access to Giphy's moving images, called gifs. Facebook's response described the CMA's complete divestiture remedy as "grossly unreasonable and disproportionate", and questioned the watchdog's authority to enforce such action.
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Thursday's Shareholder Meetings
Aberdeen New India Investment Trust PLC - AGM
Atlantis Japan Growth Fund Ltd - AGM
Chelverton UK Dividend Trust PLC - AGM
FIH Group PLC - AGM
Gear4Music Holdings PLC - AGM
Invesco Asia Trust - AGM
Montanaro European Smaller Companies Trust PLC - AGM
Mothercare PLC - AGM
Redcentric PLC - AGM
Schroder Real Estate Investment Trust Ltd - AGM
Speedy Hire PLC - AGM
Tufton Oceanic Assets Ltd - EGM re placing and disapplying pre-emption rights
U&I Group PLC - AGM
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By Lucy Heming;Â lucyheming@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
