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Auto Trader launches placing to provide support during coronavirus crisis

Debt is expected to rise as advertising packages during April are free, resulting in a record number of vehicles being displayed

Auto Trader Group plc - Auto Trader launches placing to existing investors

Auto Trader Group plc (LON:AUTO) dropped on Wednesday as it is raising cash to strengthen its balance sheet during the ongoing coronavirus pandemic. 

The FTSE 100-listed firm is undertaking a placing to existing investors of 46mln shares, representing around 5% of its issued share capital, via an accelerated book-build which determine the price and the amount raised.

The online vehicles seller, which at the end of February had drawn down £289mln off a £400mln debt facility, said the extra cash will be used to support the business as coronavirus hits trading.

READ: Auto Trader skids as it defers payments and charges amid coronavirus crisis

Auto Trader said it expects debt to rise as it has offered free advertising packages to retailers during April.

The group revealed that customers have been rushing to place advertisements, resulting in a record number of vehicles displayed on the website - 540,000 as of Tuesday as compared to 480,000 last year.

The firm also announced cost-saving measures with its board offering to take only half of their salaries for the foreseeable future and waived their annual bonuses.

Marketing spend has been paused and a furlough programme for Auto Trader’s employees will start “shortly, it added.

The group's management said no decision has been made regarding the final dividend though it is “unlikely” it will be declared.

Shares slipped 4% to 422.8p on Wednesday at the opening bell.

It is a “clever and shrewd move” said analysts at AJ Bell. 

“Securing extra cash now should keep the banks at bay and ensure the automotive portal operator isn’t breaching any debt covenants.

“Auto Trader is also strengthening its balance sheet to enable it to go hunting for opportunities in the immediate aftermath of the crisis.”

  --Adds shares and broker comment--

Quick facts: Auto Trader Group plc

Price: 558.2 GBX

LSE:AUTO
Market: LSE
Market Cap: £5.39 billion
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