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(Alliance News) - Saga PLC on Thursday said it has made encouraging operational progress since the start of the year, and highlighted the resilience of the business through a time of unprecedented challenge presented by Covid-19.
In addition, the company - which specialises in products and services for people over 50 years old - said it intends to raise GBP150 million to strengthen its balance sheet, improve liquidity and support the execution of its reinvigorated strategy under its strengthened management team.
The fundraising is underpinned by a strategic investment of up to GBP100 million by Roger De Haan, Saga's former chief executive officer and the son of the founder of the business. De Haan will make his investment through 224.4 million new shares representing 20% of the current issued share capital of Saga, to be issued at 27 pence per share.
Saga shares were trading 3.8% lower in London on Thursday at 15.42p each.
De Haan will also take a part in a further firm placing, raising GBP14.9 million, on the same pricing as will apply to Saga shareholders who participate in the open offer. This price will be determined at the close of the bookbuild.
Finally, De Haan will participate as a conditional placee for shares representing GBP24.5 million in the placing and open offer - expected to raise total proceeds of GBP74.5 million - subject to clawback by Saga shareholders in the open offer.
Upon completion of the fundraising, Saga said it will implement a share consolidation, subject to shareholders' approval, pursuant to which every 15 shares of 1 pence nominal value will be consolidated into one consolidated share of 15 pence nominal value, which is expected to become effective on October 12.
This move is designed to ensure that Saga is well positioned to strengthen the business in the short term, against the backdrop of the Covid-19 outbreak and the continued suspension of Saga's Travel businesses.
Turning to the half-year results, Saga said it swung to loss of GBP55.5 million compared to GBP52.6 million profit the year before. For the six months to July, revenue decreased by 51% to GBP192.4 million from GBP395.9 million.
Saga reported an impairment of Travel goodwill of GBP59.8 million, with no such cost recorded a year earlier, while restructuring expenses rode to GBP28.3 million form GBP2.2 million.
"We have conducted a comprehensive review of strategy and have developed a plan which we believe will strengthen our brand, improve our focus on our customers, deliver exceptional experiences for them, and return both our Insurance and Travel businesses to growth," explained Chief Executive Euan Sutherland.
"We are excited about the opportunities ahead, whilst mindful of the fact that we face into challenges with the continuation of the Covid-19 pandemic," added Sutherland.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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