Hays PLC (LON:HAS) is looking to drum up £200mln from City institutions as the recruiter was hit by a “very material deceleration” in activity due to the coronavirus pandemic.
The 1.11p per share interim dividend that had been due to be paid next week has been cancelled, saving £16.3mln, and tax deferrals of £100mln are expected too.
A net cash position of roughly £35mln, down from £103mln at the end of December, and £165mln of undrawn borrowing facilities are felt to be strong enough, especially with the capacity to reduce the cost base by up to £20mln per month if needed.
But the board wants to carry out the equity placing “to ensure that we have a strong balance sheet and can continue with minimal or no debt once our end markets stabilise”
Hays said in recent weeks it has seen “growing interest from many existing and prospective large blue-chip clients looking to consolidate their white-collar recruitment outsourcing with a financially strong partner”.
While the current environment is highly challenging, management predicts “significant and attractive opportunities in our markets” as they expect this recent trend to increase further over the coming months, with the industry “likely to see a material 'flight to quality' both during and in the aftermath of Covid-19”.
However, there is certain to be a substantial impact on temporary and permanent hiring because of from government lockdowns across its markets — with its key regions being Australia, Germany and the UK — with operating profits for the year to 30 June likely to be nowhere near the £190m consensus forecasts.