Textile provider Johnson Service Group (JSG) has announced its intention to raise approximately £85m through a share placing.
The group said that while trading for the first two months of the year was in line with expectations, it maintained a strong financial position and the board remains confident in its long-term prospects, it is seeing a significant amount of disruption due to coronavirus.
The proceeds of the placing will be used to improve the group's liquidity position and strengthen its balance sheet in the current challenging environment.
The placing is being conducted through an accelerated bookbuilding process. Investec Bank is acting as sole broker and sole bookrunner.
JSG's workwear business, which provides garment rental, protective wear and laundry services, continues to supply key industries and all processing sites remain open. Although organic revenues were around 12% down in April, early indications of some customers reopening have been observed in May.
However, within its business that serves the hotel, restaurant and catering markets, the group has ceased processing at the vast majority of its 18 sites and April saw revenue fell by 97% on an organic basis due to the closure of most of the group's hospitality customers.
Revenues during May are expected to be slightly ahead of April, as a small number of customers reopen, and the group is anticipating the market to slowly recover from July, with sites reopening on a phased basis depending on demand. But it does not expect revenues across its hospitality business to normalise until the second quarter of 2022.
Cost-cutting measures implemented across the business including the furloughing of employees, temporary salary reductions across the board and senior management team, the curtailing of all non-essential expenditure and the withdrawal of the 2019 final dividend.