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Whitbread goes cap in hand to shareholders for GBP 1bn
Posted on Thursday, 21 May 2020 13:22
Whitbread is tapping shareholders for as much as GBP 1.00 billion to give itself a significant competitive edge when others may be financially constrained due to the COVID-19 pandemic.

JPMorgan Cazenove and Morgan Stanley are joint global coordinators on the rights issue, which is based on one new share for every two existing stocks.

At 1,500 pence apiece, the cash call represents a discount of 37.4 per cent to the theoretical ex-rights price of 2,395 pence yesterday.

Whitbread operated more than 800 hotels and over 400 restaurants in the UK and Ireland, as well as six hotels in Germany and ten hotels in the Middle East, as at 27th February 2020.

The group said it “is looking to replicate its success in the UK in other international markets and is currently focusing on Germany”.

It noted the rights issue will provide confidence and flexibility to take full advantage of compelling structural opportunities in both of these countries.

On the other hand, by filling up its coffers, Whitbread will also have further liquidity headroom to stay afloat in the event of a resurgence of COVID-19.

Premier Inn’s owner had cash of GBP 300.00 million, as at 15th May 2020, and access to its GBP 950.00 million revolving credit facility, of which only GBP 50.00 million is drawn at the date of today’s announcement.

The group entered the new financial year ending 27th February 2020 with lease adjusted net debt to funds from operations of 2.6x and net debt of GBP 323.00 million.

Zephyr, the M&A database published by Bureau van Dijk, shows 493 capital increases by UK-based companies have been announced in 2020 to date.

Whitbread’s rights issue is the second-largest, after Compass Group’s GBP 2.00 billion cash call and only marginally ahead of Informa’s placing and subscription, also in the region of GBP 1.00 billion.

© Zephus Ltd