Fulham Shore, which operates Franco Manca and the Real Greek restaurant brands, has proposed a £2.25m equity fundraise to strengthen the group's balance sheet and provide additional working capital.
The group has also entered into a new £10.75m debt facility and agreed new terms for its existing £15m banking facilities.
In a trading update, the group said the majority of its Franco Manca (49 of 51) and Real Greek restaurants (14 of 18) have reopened, and although social distancing means sites are operating at 60%-70% of their previous capacity, this has to some extent been compensated by an increase in delivery and takeaway sales.
About 9% of the group's restaurants will not reopen to dine-in customers until office workers and theatre-goers return to the City and the West End of London, and the continued closure of these sites is expected to negatively impact the group's financial performance. But for those that have reopened, trading is "promising", and in the four weeks since 6 July, like-for-like restaurant sales at reopened sites were approximately 72% of the same period the previous year.
The group has shared approximately half the benefit of the six-month reduction in VAT on food with its customers, and both of its brands are participating in the government's Eat Out to Help Out initiative, both of which are expected to have a positive impact on the group's trading.
The directors said they believe the company is "firmly in the ‘survive and prosper' group" and hope to return to more normal trading conditions over the next 12 to 18 months, after which Fulham Shore will resume its expansion programme and take advantage of depressed lease acquisition prices and rents.
Just two further sites are in the pipeline for the group, a new Franco Manca at the Cut near Waterloo Station in London, which is being built and will open next month, while another site in Glasgow has been delayed and is now expected to open after March 2021. There are no more plans for new restaurants until the directors can see how the existing sites operate over the rest of the financial year.
The group's net debt as of 5 August was £8.9m and Fulham Shore said these new banking arrangements, together with the fundraise, will give the company substantial headroom of at least £18m over its current net debt.