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Loungers latest to look to share placing as it commits to resuming roll-out post-closure

22 April 2020 by
Loungers latest to look to share placing as it commits to resuming roll-out post-closure

Loungers, the operator of 167 Lounge and Cosy Club sites, is the latest hospitality business to look to a share placing to provide additional liquidity.

Loungers is undertaking a placing of up to 9,250,000 new ordinary shares of 1p each to also provide capital to enable the group to emerge strongly from lockdown and recommence its roll-out once consumer confidence has returned and trading conditions allow.

Assuming completion of the placing, the board estimates that the company will have available funds of approximately £31m, which would equate to around 46 weeks' liquidity.

City Pub Group raised £22m through a share placing just last week and Wagamama owner, The Restaurant Group, raised £57m earlier this month.

Actions including putting 99% of employees on furlough, pausing all capital expenditure, renegotiating creditor payment terms, negotiating with landlords and utilising other government initiatives such as the business rates exemption and VAT payment deferral have reduced Loungers' weekly cash burn during closure to £480,000. This also includes cutting director salaries by half for the duration of the closure.

As at 17 April 2020, the company had £4.1m of cash on its balance sheet, undrawn facilities of £3m and net debt of £35.4m. Loungers also announced that Santander and Bank of Ireland have agreed to provide an incremental £15m revolving credit facility for 18 months.

The board said the company's value for money offer, broad customer base, historically low rent to revenue ratio, limited exposure to central London or travel hubs and negligible exposure to tourism, leaves it "very well positioned to recover quickly" once its sites are permitted to reopen and to adapt to any changes in consumer behaviour and demand.

City Pub Group raises £22m through share placing >>

Wagamama owner raises £57m in share places but warns some sites may not reopen >>

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