(Alliance News) - Safestyle UK PLC on Tuesday launched a placing to raise GBP8.5 million in order to strengthen its balance sheet and provide a cash buffer to support the business during the Covid-19 pandemic.
The PVC replacement window retailer and manufacturer said the 50.0 million share placing was priced at 17 pence per share and that the placing would take place via an accelerated bookbuild, which launched immediately after its Tuesday announcement with results set for release on Wednesday.
Shares in Safestyle closed up 14% at 16.72 pence in London on Tuesday.
Zues Capital Ltd and Liberum Ltd acted at joint bookrunners for the placing, with placing shares to represent around 38% of Safetyle's enlarged share capital.
Safestyle noted that its banking covenants are to be waived for six months after the placing and will apply throughout the government shutdown period with a reduced earnings before interest, tax, depreciation, and amortisation covenant target in place for the rest of 2020 once trading resumes.
The company's primary lender is Aurelius Finance Co, with which Safestyle holds a GBP7.5 million facility, expiring October 2021, consisting of a GBP4.5 million term loan and GBP3.0 million revolving credit facility.
The placing is conditional upon shareholder approval at a general meeting, though Safestyle's board noted that should the placing not go ahead "the company could, if the current Covid pandemic shutdown continues beyond the end of June, then lack the funding to underpin the business."
"Without the proceeds of the placing and the consequent satisfaction of the condition to the amending of its banking arrangements with Aurelius, should the UK government's 'Stay at Home Measures' be extended beyond the end of June 2020, the company could be at risk that it will not be able to continue trading as a going concern and the company could then be unable to comply with one or more financial covenants that are in place under the terms of its existing facilities with Aurelius," said Safestyle.
Safestyle went on to add that if it could not then come to an agreement with HM Revenue & Customs and its creditors it could be subject to an enforcement action and shareholders would likely lose all or most of the value of their investment.
"In the context of the current outbreak, it is important that all shareholders vote in favour of all of the resolutions so that the placing may proceed," Safestyle said.
By Anna Farley; annafarley@alliancenews.com
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