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(Alliance News) -Â SSP Group PLC on Wednesday said it plans to raise around GBP475 million via a fully underwritten rights issue.
The company said 258.1 million new shares will be offered at the rights issue price of 184 pence per share on the basis of 12 new shares for every 25 existing shares.
Shares in SSP were down 5.7% at 326.20p in London on Wednesday, with the rights issue price representing a 47% discount to Tuesday's closing price of 345.80p.
"Alongside and conditional upon the rights issue, the group has secured the extension of its bank facilities that were previously due to mature in July 2022 to January 2024, and secured waivers and modifications of the existing covenants under those bank facilities and its US private placement notes," SSP said.
This "holistic" set of measures will strengthen SSP's balance sheet and protect the business if the global travel sector experiences a more prolonged recovery from the pandemic and, under the company's base case, provide increased capacity for investment as the travel market recovers.
SSP, an operator of food and beverage outlets in travel locations, has been hit hard by the pandemic and ensuing travel restrictions.
The company said that in January and February this year, revenue was down 82% versus the equivalent months in 2019, being before the pandemic struck. In the first week of March, revenue was down 81% on 2019, with revenue in the six months to the end of March expected to be down around 80% on the same period in 2019.
SSP currently expects like-for-like revenue - representing sales from units open during the entirety of the 2019 financial year - to recover to broadly to pre-pandemic levels in the 2024 financial year.
SSP said it has taken "rapid and decisive action" since the start of the pandemic, though continues to see cash outlows due to low activity in the global travel market. The board is confident in the medium-term outlook for SSP's end markets, it added, though the profit of the recovery remains uncertain.
"Strengthening the balance sheet now will underpin the business if the recovery in the travel sector is slower than we anticipate and it gives us the capacity to invest in growth opportunities as we emerge from the pandemic. Our current expectation is that the early recovery will be led by domestic and leisure travel from which we are well-placed to benefit," said Chief Executive Simon Smith.
"We are ready to re-open rapidly, welcome back our teams, and provide our travelling customers with a great service when they return," Smith said. "Looking further ahead, the actions we're taking will allow us to capitalise on the recovery as well as future new business opportunities, enabling us to deliver long term sustainable growth for the benefit of all our stakeholders."
By Lucy Heming;Â lucyheming@alliancenews.com
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