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Rank may take a gamble on equity issue
Posted on Thursday, 05 November 2020 10:45
Rank Group announced today it is continuously reviewing its financial position and is in talks with advisors regarding a potential equity issue representing 19.9 per cent of its current issued capital.

The Grosvenor Casino owner noted a fundraiser would strengthen its balance sheet “in this unprecedented trading environment” but cautioned there is no certainty the proposed cash call would proceed.

Its statement comes the same day as England enters a month-long lockdown in an attempt to flatten the growing curve of the coronavirus infection numbers in the country.

Rank’s announcement confirms a report by Sky News yesterday indicating the group is expected to raise tens of millions of pounds to bolster its balance sheet.

The news broadcaster noted that under emergence rules, companies can fast-track a placing equating to as much as a 20.0 per cent of their market value.

On this basis, as Rank is currently trading at 87.00 pence and a capitalisation of GBP 339.90 million, as at 08:16 today, an equity dilution could fetch roughly GBP 67.98 million.

The company and its subsidiaries operate gaming services in the UK and Spain, which are its largest markets, as well Belgium and India.

Along with Grosvenor Casino, it also owns the Mecca Bingo and Enracha brands, as well as diverse digital channels such as Yo Bingo, and Lucky Pants.

In the 12 months ended 30th June 2020, Rank had underlying net gaming revenue of GBP 638.10 million (FY 2019: GBP 695.10 million) and underlying operating profit of GBP 51.10 million (FY 2019: GBP 75.7 million).

Zephyr, the M&A database published by Bureau van Dijk, shows 1,082 capital increases by UK-based companies have been announced in 2020 to date.

Aveva’s cash call of GBP 2.68 billion is currently the largest of these, followed by Rolls-Royce Holdings, which raised GBP 2.06 billion at the end of October.

© Zephus Ltd