Compass Group PLC (LON:CPG) saw its shares retreat on Tuesday as the contract caterer unveiled plans to raise £2bn via share issues to strengthen its financial position during the coronavirus (COVID-19) pandemic.
The FTSE 100-listed firm said its revenues have fallen sharply since the start of March due to the impact of lockdowns across its markets.
Sales in April fell by 46%, following a 20% decline in March and additional liquidity is needed to weather the crisis, the company said.
Around half of its facilities were shut last month with Sports & Leisure fully closed, Education and Business & Industry mostly closed (65%) and Healthcare & Seniors and Defence, Offshore & Remote almost fully open, it added.
In response, monthly costs have been reduced by £500mln which has helped mitigate the loss in revenues, said the group.
In the half-year to March, the impact of the closures on operating profit was 28.5%, though Compass said this improved slightly in April to a fall of 23%.
Net debt at end April was £4.87bn, with the group having committed loan facilities of £2.8bn while it has also taken up a £600mln loan from the UK governments COVID-19 scheme.
Following the placing, which will be carried out through a bookbuild today and includes a retail offer through PrimaryBid, the company said its net debt will drop to £2.9bn.
Compass Group's interim results for the six months to March showed revenues rose by 1.6% to £12.6bn while operating profits fell by 10% to £854mln.
Reinforces credentials as a survivor
Commenting on the fundraising, Russ Mould, investment director at AJ Bell said: “The business could probably have withstood a fair while longer in the pressure cooker of the coronavirus crisis without going cap in hand to shareholders.
“However the fundraise should reinforce its credentials as a survivor in its market and one with the capacRead More – Source