City Pub Group has launched a share placing to raise up to £15m and an open offer to raise up to £7m as it looks to strengthen its balance sheet during the coronavirus lockdown.
Investors will be able to buy shares at an issue price of 50p per new ordinary share, which represents a discount of 10.7% to the closing price on 26 March.
Proceeds from the share issue will also be used to expand the group’s chain of 47 pubs across southern England and Wales, should opportunities arise.
Liberum Capital is acting as sole bookrunner for the share issue and will decide on the timeframe for the process.
City Pub Group has been forced to close its pubs as part of the UK’s lockdown to battle the coronavirus pandemic. It has already taken steps to reduce costs, including reducing its temporary and permanent workforce and its directors agreeing to reduce their salaries by 50%.
The firm said it was also in discussions with its landlords to attain rent holidays and reduce other commitments.
It has enough working capital to maintain its operations for at least six months without having to inject further cash into the business. Its monthly cash costs are estimated to be around £350,000.
Current net debt is approximately £32m against a portfolio consisting largely of freehold assets (90%) with a net book value of £116m as at the end of December.
The group’s directors believe that if the share issue is successful, the company will be well placed to grow the business and recover shareholder value once its pubs reopen.
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