10th Mar 2021 10:57
(Alliance News) - Restaurant Group PLC shares rose on Wednesday even as the casual dining chain owner posted a sharply widened loss for 2020 and unveiled plans for a GBP175 million capital raise, its second since the virus pandemic began.
The stock was trading 1.8% higher at 112.30 pence a share in London after jumping as high as 129.10p at the start of the day.
Revenue for 2020 more than halved to GBP459.8 million from GBP1.07 billion in 2019, while the owner of pan-Asian brand Wagamama posted a pretax loss of GBP127.6 million, widened from a GBP37.3 million loss the year before. This included exceptional charges of GBP40.1 million relating primarily to restructuring.
"Our reported results reflect that we have been closed for 'dine-in' in many of our restaurants for a very significant proportion of 2020," said Restaurant Group.
More positively, in the periods when the company was allowed to trade for dine-in, Wagamama continued to deliver "exceptional" like-for-like sales growth, trading well ahead of management expectations.
The company said the pandemic and associated restrictions are likely to hit its ability to reduce leverage organically or support selective growth opportunities in the medium term. As a result, it proposed a GBP175 million capital raise.
The proceeds will be used to improve liquidity headroom, accelerate deleveraging and strengthen the company's ability to capitalise on site expansion for Wagamama and its Pubs businesses.
The funds will be raised via a firm placing of 95.3 million shares and a placing and open offer of 79.7 million shares. The fundraise will be priced at 100p per share, which the company said marked an 11% discount to Tuesday's closing middle market price of 111.7p.
The company had raised GBP57 million in equity back in April, when the health crisis first closed sit-down restaurants.
"The capital raising, announced today, will significantly strengthen the group's balance sheet and provides TRG with the flexibility to invest in growing our business. Whilst the sector outlook remains uncertain, and we are mindful of continuing restrictions across the UK, we are confident that the actions announced today will allow us to emerge as one of the long term winners," said Chief Executive Andy Hornby.
Looking ahead, Restaurant Group said the short-term outlook is uncertain whilst restrictions are in place. However, the company noted that it has strong capability to deliver an accelerated reopening plan, once the current restrictions for hospitality businesses end.
For the four weeks to the end of February, the company said its performance of delivery and takeaway has been "extremely encouraging", with average weekly delivery and takeaway sales being more than two timed higher than pre-Covid-19 levels for Wagamama and five time up pre-Covid-19 levels for Leisure.
By Evelina Grecenko; [email protected]
Copyright 2021 Alliance News Limited. All Rights Reserved.
Related Shares:
RTN.L