Greencore Group PLC (LON:GNC) raised gross proceeds of £90mln via a share placing to cope with subdued trading after posting a full-year loss.
The food-to-go producer placed 79mln shares at 112p, a discount to Monday’s closing price, representing 18% of its existing issued ordinary share capital.
READ: Greencore estimates full-year revenue to drop 14%
The cash will be used to manage debt levels, avoid other cost-cutting measures and potentially make new acquisitions.
Revenue momentum during the summer was halted by regional UK restrictions in October that were implemented in response to rising cases of COVID-19, and that worsened during the current lockdown.
The Irish firm expects the pandemic will continue to have an impact on its trading environment in the current financial year.
In the full-year results, released after close on Monday, Greencore said the first five weeks of the current period saw revenue drop 26% in the food-to-go categories, while the convenience segment dipped 1%.
The company has already adopted cost-saving measures such as the use of the new furlough supports, pay freezes, elimination of discretionary spending, and a reduction in planned capital expenditures.
In the year to September 25, revenue slid 12% to £1.2bn, while last year’s £56mln profit before tax turned into a £10mln loss. Net debt at year-end was £350mln and the board did not propose a dividend.
Analysts at house broker Shore Capital said 2019 trading levels might not return until 2022.
“We believe Greencore has bolstered its liquidity and with the resources in place to prevent what could be damaging additional cost and capital control, the group can look forward to a post-vaccine calendar year 2021 with confidence, returning to strong growth with enhanced operating capabilities (e.g. automation), strengthened market relevance and positions plus tools to broaden its reach by category and channel,” they noted.
Shares were flat at 119.16p on Tuesday morning.