Italian caterer Autogrill has said that it is planning to raise up to €600 million with a sale of new shares to strengthen its balance sheet and seize potential opportunities in its COVID-19 pandemic-battered sector.
Shares in the group, which has burnt through cash by keeping half of its outlets open in deserted airports and on highways with no cars, plunged by as much as 15% after it announced that it will seek to raise almost half of its current market value from shareholders.
"We are starting a journey aimed at strengthening our capital structure, to be financially ready and flexible to take advantage of any potential future opportunities," Autogrill chief executive Gianmario Tondato Da Ruos said in a statement.
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The company said that it aims to complete the capital increase by the end of June.
A company source told Reuters that the rights issue will allow the group to restore the financial flexibility that it had before the coronavirus crisis.
In June, Autogrill reached an accord with creditor banks for a temporary suspension of periodic checks on key debt ratios to avoid pandemic-driven breaches of lending agreements.
Citi analysts said that €600 million should be enough "for both liquidity and [debt] covenant purposes, assuming some trading recovery through the year".
The cash will also allow Autogrill to pursue opportunities to grow its business, the source added without ruling out potential merger and acquisition activity.
The Benetton family holding company Edizione, which Autogrill's top investor with a 50.1% stake, said that it welcomes and will buy into the planned capital increase.
Citigroup, Credit Suisse and Mediobanca are expected to be part of a banking consortium that will handle the proposed rights issue, two sources familiar with the matter said.
Autogrill, like its rivals, has been hit hard by the COVID-19 pandemic and its effects on global leisure and business travel.
Sales, Loan, Debt And Core Profit
The company's sales fell by 56% in the first eight months of 2020, and in November it took a €300 million loan backed by a state guarantee.
Debt nearly doubled to €1 billion in the first half of 2020 while core profit shrank to €52 million from €454 million in the same period a year earlier.