Conviviality To Raise GBP125 Million, Again Lowers Earnings Estimates (ALLISS)

LONDON (Alliance News) - Conviviality PLC late Wednesday lowered its earnings expectations for a second time and said that it intends to raise GBP125 million via share placing.

The alcohol wholesaler also said that it continues to have constructive discussions with lenders and with HM Revenues and Customs regarding a GBP30.0 million tax bill due at the end of the month. PwC has undertaken a review of the business and its future funding requirements, it added.

The company, through its broker Investec Bank PLC, has held meetings with institutional investors to effect an equity placing to raise gross GBP125.0 million. It also intends to make a share open offer of up to the pound sterling equivalent of EUR5.0 million, if the share placing is successful.

The GBP125.0 million placing proceeds are expected to be used by the company to resolve overdue payments with its creditors, settle the GBP30 million tax bill, repay the GBP30.0 million loan facility and for working capital purposes.

Conviviality said it now expects adjusted earnings before interest, taxes, depreciation and amortization for the year ending April 29 to be in the range of GBP45.5 million to GBP46.0 million and net debt to be below GBP100.0 million. Last week, the company said adjusted Ebitda for the year is expected between GBP55.3 million and GBP56.4 million, with net debt at around GBP150.0 million.

"The reduction in the expected adjusted EBITDA outturn for the current financial year from that announced on 13 March is principally due to (i) the Company managing its customer and supplier base through the issues associated with its short term funding requirements and (ii) the deferral of franchise income arrangements as a consequence of the Board delaying completion of further franchise agreements," the company said.

"The board believes that the placing is the most appropriate mechanism to recapitalise the business. However, the company continues to explore other funding alternatives in the event that the placing is unsuccessful. If the Company is unable to raise funds by way of the Placing or otherwise, it is unlikely to be able to trade on a going concern basis," the company added.

Shares in the company remain suspended from trading.