14th May 2020 12:38
(Alliance News) - Scapa Group PLC on Thursday said it has boosted its liquidity position by raising GBP32.6 million through the issue of equity and taking on a new GBP15 million short-term bank loan.
The wound dressings and self-adhesive tapes maker has placed 30.8 million new shares at 105 pence per share, a discount of 1.9% to 107p share price on Wednesday.
Shares in Scapa were up 1.0% at 108.04p each in London on Thursday.
In conjunction with the placing, Chief Executive Officer Heejae Chae, and Non-Executive Directors David Blackwood, Brendan McAtamney and Tim Miller, as well as some members of the senior management subscribed for 319,044 new shares at 105p each, contributing GBP335,000.
Numis Securities Ltd and Joh Berenberg Gossler & Co KG acted as joint bookrunners in relation to the share placing.
"The board consider it prudent to take action now in order to withstand the adverse financial impact caused by the disruption as well as to have sufficient resources to support ongoing operations and to provide flexibility to capitalise on any potential opportunities in a post-Covid-19 environment," Scapa said.
The Greater Manchester, England-based company also has secured a new GBP15 million short-term facility, to sit alongside the company's existing GBP80 million revolving credit facility, and certain temporary revisions to its banking covenant arrangements.
In order to conserve cash, Scapa has taken several other measures including a reduction in the use of contractors, pay cuts for directors and senior managers, a deferral of its pension scheme contribution, and the suspension of the payment of its final dividend.
For the financial year that ended in March, Scapa is expecting to report revenue of GBP320.6 million, up 2.8% from GBP311.8 million in financial 2019. Trading profit is expected to have been GBP28 million, down 27% from GBP38.2 million. Adjusted net debt stood at GBP54.4 million.
Under Scapa's Covid-19 scenario planning, the company is expecting to generate revenue of around GBP272 million in financial 2021, around 80% of the previously budgeted revenue for the year. Trading profit is expected to be roughly half of original management estimates.
The company expects revenue and profit to recover in financial 2022. Revenue is estimated to grow by between 5% to 10% from financial 2021 level in financial 2022. Trading profit is also expected to grow significantly year-on-year.
CEO Chae said: "We believe there are strong tailwinds emerging in our two business segments, Healthcare and Industrial, and a strengthened balance sheet will provide flexibility to fully realise potential opportunities in a post-Covid-19 environment. We are confident that both the proposed placing and debt re-financing, alongside cost saving initiatives, will enable Scapa to cement its strong market position, trusted partner status and ability to quickly support its customers."
By Tapan Panchal; [email protected]
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