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On 17 March, FTSE 250 food and beverage company, SSP Group, announced its plans to undertake a fully underwritten £475m rights issue. The fundraise is hoped to ‘strengthen (its) financial position and resilience, and position (it) for the next phase of the pandemic.’
Although SSP’s share price dropped from an opening of 348.8p to close at 318.4p on the day of the announcement, the news will come as no surprise to shareholders following the company’s final results in December. Despite an optimistic stance from CEO Simon Smith, the impact of COVID-19 on the travel sector was keenly felt by the global operator of food and beverage outlets in travel locations, which reported revenue down by 48%, like-for-like sales down 51%, and a dismal performance in Q3, as the second wave of the pandemic and consequent global lockdowns dwindled down passenger numbers. In February, the company issued a statement citing its confidence in the recovery of the travel sector, but noting the uncertainties caused by the pandemic had caused it to review its funding options in order to strengthen its balance sheet.
The fundraising is subject to shareholder approval at a general meeting on 6 April. Should the rights issue go ahead, it will be the group’s third fundraising in just over a year, following a £215m placing in March 2020 and a smaller £10m placing in June 2020. It is also one of the biggest secondary fundraisings announced so far this year, ranking only behind Anglo-German company TUI AG’s £485m rights issue. Another casualty of the pandemic’s impact on the travel, leisure, hospitality and tourism industry, TUI’s fundraising was nevertheless well received by shareholders, and the company has seen its share price climb since, likely bolstered by a surge in holiday bookings since the government set out a clear roadmap out of lockdown. Similarly, AIM-listed airline Jet2 plc carried out a successful fundraise of £422m in February 2021, which was said to be significantly oversubscribed and strongly supported by existing shareholders and new investors.
Rights issues experienced a resurgence in 2020, following a quieter 2019, and the trend appears to be continuing into Q1 2021. Market Tracker will look into secondary fundraisings in more detail in its upcoming Equity Capital Markets trend report, expected to be published in the coming month.
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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.
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