WHS raises £166m for its coronavirus battle

WHS raises £166m for its coronavirus battle

W H Smith has said it had secured just under £166m in equity, tapping up investors for a cash boost as it seeks to mitigate the impact of the Covid-19 lockdown. 

The retailer issued a statement saying it has placed 15.8 million shares at 1,050p each at discount of 4% to the closing price on 6th April. This follows its statement on 6th April which said it had secured new lending facilities of £120m, which will strengthen its "balance sheet, working capital and liquidity position" — but that £120m was contingent on a cash injection. C.e.o. Carl Cowling was one of the investors, subscribing to more than 7,000 shares. 

"These financing arrangements, coupled with a broad range of mitigating actions to manage the cost base and cashflow, will provide sufficient liquidity to deal with this most challenging of trading environments," WHS said in its statement. 

Though nearly 95% of its estate is closed, WHS has been one of the few bricks-and-mortar booksellers to have shops in operation during the government lockdown as around 200 outlets which are in hospitals and act as Post Offices remain open.    

In a trading statment in March, WHS estimated that the coronavirus would cause revenue to decline by £100m–£130m and profit before tax by between £30m–£40m. 

The group has now said that its revenue could be down as much as 80% to 85% year-on-year for the period May to end-August, predicting it will fall 90% in April, having been down 25% in March.

Cowling said: "We are a resilient business and with the new financing arrangements announced today, together with our continued focus on managing cost, we are in a strong position to navigate through this time of uncertainty and are well positioned to benefit from the normalisation and growth of our key markets."