RE: Placing, cash raise?10 Jun 2025 13:31
Equity is an option but it is discussed to deal with a worst case scenario every time it is mentioned (although I've seen many times when you get a surprise equity raise) :
"Covenant compliance with comfortable levels of headroom on adjusted EBITDA, interest expense and net debt is forecast throughout the period under the base case, improving progressively over time, albeit when stress tests are applied, mitigating actions, such as those described below in the Conclusion, would be required to maintain compliance,."
"As ever, covenants that include Covenant EBITDA as a component are more sensitive to reverse stress testing; the Directors have therefore conducted in-depth stress testing on all covenant tests at June 2025, December 2025 and June 2026. In doing so, the Directors have considered all cost mitigations that would be within their control if faced with another short-term material Covenant EBITDA reduction and no lender support to amend or waive Covenant EBITDA-related covenants. Taking this into account the Directors concluded that the probability was remote that circumstances arise that cause covenants to be breached. Reverse stress tests have been performed against a reduction in revenue, incremental cost inflation that cannot be recovered, and an inability to achieve planned cost savings and in all instances, no instances of a covenant breach were identified.
In any case, should there be a more severe set of circumstances than those assumed in the reasonable worst case, a number of further mitigating actions are available to the Group which would improve EBITDA and/or benefit adjusted net debt, including: deeper and broader cost cutting measures, sale and leaseback of vehicles, disposal of properties, delays or reductions to capital expenditure and disposal of investments or other assets. The Group could also seek to raise further equity or seek further amendments or waivers of covenants, as was demonstrated during the Covid-19 pandemic."
"Further options to reduce debt and leverage remain under active consideration, albeit the business enjoys ample liquidity and no debt refinancing for the vast majority of the Core RCF facility due until 2029."
"The disposal of Mobico’s North America School Bus business and the funds will be utilised to primarily reduce our net debt"
To say all that and raise equity would be poor form, but I've seen it before.
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