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Thu 30th Apr 2020 - JD Wetherspoon raises £141m, Tim Martin's stake diluted to 28%
JD Wetherspoon raises £141m, Tim Martin’s stake diluted to 28%: JD Wetherspoon has successfully placed 15,668,430 new ordinary shares at a price of 900p per share. Concurrently with the placing, certain directors, including John Hutson, chief executive, Ben Whitley, finance director, and Tim Martin, founder and chairman, and members of the senior management team of the company have subscribed for an aggregate of 33,330 new ordinary shares in the company at the placing price – management has subscribed to £300,000 of new shares in total. The company stated: “Together, the placing and subscription of 15,701,760 new ordinary shares has raised gross proceeds of approximately £141m. The placing price of 900p represents a discount of 6.0%. to the mid-market closing price of 957.5p on 29 April 2020 (being the latest practicable date prior the date of this announcement). The placing shares and subscription shares together represent 15%. of the existing issued share capital of the company. The placing was implemented on a non-pre-emptive basis.” Chairman Tim Martin has acquired 20,000 new shares, chief executive John Hutson has acquired 3,333 shares and finance director Ben Whitley has bought 1,110 new shares. Analyst Tim Barrett, of Numis, said: “The chairman’s decision to allow a 15% placing and dilute his stake by circa 5ppt to 28% seems to largely solve JDW’s financing conundrum. It was ill-prepared for shut down and on its new Jul-20 forecast would have had less than 3m of headroom. An additional £141m equity will provide a useful buffer, but we are cautious on the speed of recovery post lockdown and are sceptical on its new projections. The company believes it can be cashflow neutral at -50% like-for-like sales, which implies an average weekly turnover of £23k per site. As an illustration: £10 average spend per head would require 329 daily visitors per site, which may be hard to achieve in a manner consistent with social distancing. It has presented two optimistic scenarios whereby pubs reopen in late June (i.e. 12 week closure). Scenario One: lacks credibility as it assumes sales are only 10% lower in month one and progressively improve (-8% in Q1). If social distancing measures remain, this may not even be physically possible. We would discount this outcome as it shows sales 3% above FY19 and Ebitda at parity. Scenario Two: seems more realistic: a 25% like-for-like decline in H1, gradually recovering to leave FY21 sales 17% below 2019. Ebitda is guided at £170m, with FCF of £1m. In this case by 2022 FCF jumps to £149m largely as the company intends to reduce maintenance from 4% to 2% of sales (saving £36m). Pending further analysis, we assume a run-rate FCF of c.£75m, below the £97m generated in FY19. Overall, JDW’s decisive action to increase liquidity is reassuring but forecasts clearly remain subject to the regulatory constraints of social distancing. For a business with such high operational gearing, that is uncomfortable.”
C&C Group updates on coronavirus impact: Drinks company C&C Group has said it has implemented a series of measures to reduce operating costs, maximise available cash flow, and maintain and strengthen the group’s liquidity position. These measures include: Capital spend significantly reduced; expected to be in a €7 million to €10 million range for FY21; Reduced marketing and minimised discretionary spend; Prudent and rigorous working capital management; continuing to actively engage with the Irish and UK Tax Authorities; an average c.20% salary reduction across our workforce; executive leadership team and board remuneration reduced by 30% and 40% respectively for an initial three months and reviewed thereafter; approximately 70% of employees have been placed on furlough. The company added: “In March we announced the successful issue of approximately €140 million of new US Private Placement (‘USPP’) notes. The unsecured notes have maturities of ten and 12 years and diversify C&C’s sources of debt finance. The group has current liquidity of c.€570 million of which €430 million (unaudited) is cash. This cash includes net proceeds from the USPP and the full drawdown of our revolving credit facility (‘RCF’). In addition to our bank facilities, C&C has a non-recourse, committed debtor securitization facility of £200 million that is currently 39% utilised. The board believes that its existing liquidity position is more than sufficient for the group’s current and expected needs. In addition, C&C has now received confirmation from the Bank of England that it is eligible to issue commercial paper under the COVID-19 Corporate Financing Facility (‘CCFF’) Scheme.” The company added: “The process to appoint a new chief executive remains on-going. The board’s Nomination Committee is pleased with the quality of candidates. Whilst we are approaching the final stages of this process, we expect the conclusion to be delayed as a result of government lockdown measures and consequent restrictions on travel. Our customers remain a priority during these difficult times and we are engaging where possible to support them as we overcome these challenges together. To date, we have launched the following initiatives in support of our customers: Our main production sites in Glasgow and Clonmel remain operational, with stringent social distancing and hygiene measures in place. This has allowed us to deliver security of supply of our fabric brands Tennent’s, Bulmers and Magners to our off-trade customers during a period of increased demand; We have set up a dedicated helpline to offer advice and guidance on the government support measures that have been introduced and how to access these initiatives: We have also recently launched LOCAL ( an app where people can buy food and drink from suppliers in their local communities. We have created LOCAL to help support pubs, restaurants, bars and independent drinks merchants who suddenly need to offer delivery or collection services but who do not have the technology.”

More than a quarter of UK hotels remain open to help NHS: More than a quarter of UK hotel operators have remained open in some capacity to help the NHS and other key workers according to a study by the Hospitality Professionals Association (HOSPA). In addition to helping the NHS, some 9%of hotel operators have offered rooms or support to the homeless, with the bulk of this assistance coming from the larger corporate hotel groups. Despite the impact on the bottom line, only two-thirds of hotels have furloughed more than 50% of their staff, with the majority continuing to maintain staffing levels between 25% and 50%, covering a range of day-to-day responsibilities. When it comes to reopening, the study found one-in-four of the larger corporate groups and independent hotels were assessing the situation on a daily basis, whereas half of the smaller chains presently shut were making a weekly assessment. The results also revealed May will be a critical month for hotels that remain open and closed, with more than half of corporate groups and independents saying they’ll be reviewing everything in the next few weeks, from potentially placing more staff on furlough to applying for loans. HOSPA chief executive Jane Pendlebury said: “Due to such a high number of loan rejections, some hotels have been left with little alternative other than to remain open to try to generate income, with many turning to a delivery/takeaway model to do so. The margins involved in this though, are extremely limited. It’s this resourcefulness and will to carry on that gives us confidence the industry will recover from this crisis, albeit in a much-changed hospitality landscape.”

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