DFS Furniture PLC (LON:DFS) has raised £64mln in a premium placing and subscription to shore up its balance sheet as the business was hit by the UK’s coronavirus lockdown.
The furniture group said it had raised the funds through the placing and subscription of around 42.6mln new shares at a price of 150p, a 16% premium to its closing price on Wednesday.
READ: DFS plans emergency fundraising to cushion blow of extended coronavirus lockdown
The placing is backed by existing and new institutional investors, while the subscription is supported by certain directors and members of the senior management team.
The fundraising followed a trading update from the company after the close on Wednesday, when it said that it had liquidity headroom to make it through even a “pessimistic scenario of a lockdown to 2020, followed by a historically weak sofa market”.
DFS said the lockdown was having “a very significant impact on the business” and it was currently uncertain about the actual financial impact on the business from the closure of all of its stores and a suspension of deliveries.
However, the firm said its website still remained operation and there had been “strong momentum” with online gross sales orders up 24% between 25 March and 19 April, taking its order bank to £194mln at the end of the period from £185mln at the start.
"The mitigating actions we have taken in response to [coronavirus], alongside the new financing arrangements and placing announced today, significantly increases the financial resilience of DFS for the months ahead”, said chief executive Tim Stacey.
“While the outlook remains uncertain, DFS is well placed to navigate the coming months and the board remains positive about the long-term prospects of the group", he added.
In a note on Thursday, analysts at Peel Hunt retained their ‘buy’ rating and 200p target price, saying DFS was “a market leader with a strong record of moving away from crises with higher market share than it went in”.
“The straightforwardness of the equity raise shows what high esteem DFS is held in, and rightly so… Whilst our forecasts are yet to reflect it, we see DFS outperforming the industry when the lockdown starts to be removed”, they added.
DFS shares climbed 17.6% to 151.7p in mid-morning trading on Thursday.