City Pub Gp has Successfully Raised £15m and intends to raise a further £7m from an Open Offer
has announced it has successfully raised £15m at 50p. The Company also intends to raise up to a further £7million through an open offer for Private Investors.
The net proceeds of the Placing and Open Offer will be used primarily to strengthen the Company's balance sheet and also, should the right opportunities arise, to expand the Company's portfolio of pubs at a time when the Directors' believe acquisition prices will be reduced in the short term.
Last week, the group announced the closure of all pubs and bars with a number of measures to slash costs and preserve cash. Today, it reveals it has already taken further steps to ‘significantly reduce’ its monthly cash burn including reductions in staff numbers, salaries and unpaid leave.
Obviously, given the social distancing measures imposed by the UK Government, we suspect there are several distressed sellers currently in the market. So, it should come as no surprise that the Company’s Directors believe that deploying proceeds from the placing and open offer to acquire properties will position the business to rapidly ‘recover shareholder value’ once its pubs reopen.
Shares in The City Pub Group were trading 18.75% higher at 66.5p during Friday trading.
Clive Watson, Executive Chairman of the Company, said: "We are delighted with the investor support we have had at this difficult time. Together with our existing funding arrangements, this significantly strengthens our balance sheet providing a further cushion in the event the suspended environment is extended. The additional funds will also allow improvements to our operational structure during the period of closure and enable us to grow the business and recover shareholder value once pubs are permitted to reopen.
We recognise the great support we have had from our people, suppliers, bankers, brokers and advisers and also from Government through its aid package especially regarding employment costs and business rates."
Open Offer
The Company intends to raise up to approximately £7million through the issue of 14,015,634 new Ordinary Shares pursuant to an open offer (the "Open Offer"), to allow existing Shareholders, including those who are not participating in the Placing, to subscribe for new Ordinary Shares at the Issue Price.
The terms and conditions of the Open Offer will be set out in the Circular, which will be posted to shareholders on 30 March 2020 and on the Company's website at http://www.citypubcompany.com shortly following posting.
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