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Wagamama owner looks to share placing to ensure "sufficient liquidity" through coronavirus crisis

08 April 2020 by
Wagamama owner looks to share placing to ensure "sufficient liquidity" through coronavirus crisis

The Restaurant Group has announced that it will carry out a placing of new ordinary shares to provide the company with "sufficient" liquidity to continue to operate through the coronavirus crisis.

The placement of up to 19.9% of group's existing issued share capital is in "the best interests of shareholders and wider stakeholders", the board of directors has said.

In response to the coronavirus outbreak the group, behind household names including Wagamama and Frankie and Benny's, has issued a "pessimistic scenario for the current financial year", which assumes all restaurants and pubs will remain closed until the end of June.

Overall decline in like-for-like sales is expected to reach 45% in 2020, with group total sales expected to fall by 50%.

In response the group has also capped capital expenditure for 2020 at £30m, furloughed more than 20,000 employees and is working with landlords to ensure minimum guarantees within concessions are not enforced.

The cost of the group's restaurants needing to remain closed beyond this period has been forecast to be £5m a month.

The group added: "With the government indicating that social distancing measures will remain in force post-lockdown, we believe that there will be a slow recovery in footfall during the rest of this financial year.

"We therefore assume that we would be extremely disciplined in the phased reopening of our restaurants through July to December 2020 and would expect to reopen around 400 of our 600 restaurants and pubs across that period, potentially with some restrictions on operations immediately following lockdown."

Earlier this week the group announced that it had extended its credit facility and that its executive team had taken pay cuts.

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