Johnson Service Group plc (LON:JSG), the textile rental and workwear group, is to raise £85mln to strengthen its financial position as revenues have slumped under coronavirus (COVID-19) pandemic restrictions.
The group said income from the supply of linen to hotels and restaurants fell by 97% in April as the lockdown has closed nearly all hospitality outlets.
Revenues this month have been slightly better, it said, as a handful of outlets have reopened.
Workwear has been less affected with revenues falling by 12% in April and there has been some improvement this month, the group said in a statement.
The placing has been priced at 115p and will provide sufficient liquidity to deal with a prolonged lockdown period, especially in hospitality, the company added. In early trade on Friday, the shares were trading at 130.20p, down 9%.
Johnson Service said it has also negotiated a £40mln increase in its debt facilities to £175mln and is eligible for £150mln under the government’s COVID-19 support scheme.
The group is working on a core planning scenario that sees its business start to recover slowly from July but does not expect a return to pre-pandemic levels until 2022.
Net debt at the end of April was £85mln and it is expected to peak at £110mln in 2021 under this scenario.
The final dividend for 2019 has been withdrawn saving the group approximately £8.7mln and no dividend is likely for 2020, the company said.
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