(Alliance News) - JD Wetherspoon PLC said late Tuesday that it is launching an equity placing to help the pub chain weather the storm brought about by stringent UK lockdown restrictions.
Wetherspoon is proposing to raise between GBP92.1 million and GBP93.7 million through the issue of around 8.4 million placing shares at a price between 1,100 pence and 1,120p per placing share, to be determined at the close of the bookbuild. The stock closed up 4.1% at 1,183.00p on Tuesday.
Wetherspoon said the proceeds of the placing will be used to further strengthen the company's balance sheet, working capital and liquidity position during the period of disruption brought about by the pandemic.
Further, the additional capital will provide sufficient liquidity to deal with very low sales after reopening, helping the company to return to growth as the market normalises, it added.
Investec Bank PLC is acting as the sole bookrunner.
Turning to current trading, the Watford-headquartered firm reported a like-for-like sales decrease of 28% for the 15 weeks to November 8. Sales in the latter part of the quarter were adversely affected by the introduction of changes to the tier categories, a 10pm curfew, a requirement to order all food and drink 'at the table', and the mandatory use of face masks when moving around inside pubs, it added.
Wetherspoon highlighted that all pubs have been closed since December 31 due to lockdown restrictions, from which point the company's sales have been zero.
The company noted that the duration of the current lockdown and ongoing restrictions is uncertain at this stage and the current assumptions are that its pubs will remain closed until the end of March 2021.
"The Covidâ€19 outbreak is having a severe impact on the UK pub sector. After a number of false starts, the hospitality industry generally anticipates a return to more normal trading patterns in the spring and summer, as a result of the introduction of a mass vaccination programme. The equity placing announced today will help the company, along with the other actions it has taken, to emerge from the pandemic in a strong position," said Chair Tim Martin.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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Wetherspoon (J.D) (JDW)