Compass launches £2b equity raise to weather coronavirus crisis
Compass has launched a £2b equity raise to allow it to "weather" the profound impact of the coronavirus crisis.
The catering giant has withdrawn its previous growth and margin outlooks for 2020 and revealed the plan to reduce leverage and increase liquidity.
Dominic Blakemore, group chief executive, has said the decision will help the business to "weather the crisis while continuing to invest in the business to enhance our competitive advantages, support our long-term growth prospects and further consolidate our position as the industry leader in food services".
A placing to institutional shareholders will be made alongside a separate retail offer to investors.
The world's leading foodservice company has said that its directors and members of the senior management team intended to subscribe for new ordinary shares in the capital of the company at the placing price and to contribute approximately £1.1m in total.
Today's announcement coincides with the publication of the company's interim results for the six-month period ended 31 March which reflect a period of strong trading in the five months to February and includes specific details regarding market conditions following lockdown measures imposed by governments across Compass' key markets.
However, it has reported that organic revenue had declined by 20.4% in March, and 46.1% in April, with subsequent falls in operating profits of 28.5% and 23% in the two months respectively.
In response, Compass said it had mitigated its cost base by about £500m a month through a range of measures including salary cuts for its group chief executive, board and executive committee.
Blakemore added: "The Covid-19 pandemic has had a profound impact on Compass. We can only exist with the commitment of our colleagues around the world, many of whom have been on the front line of the battle against the pandemic. I am extremely proud of how the organisation has responded, and I'm humbled by the commitment and dedication our people are showing, day in day out.
"I want to extend my deepest sympathies to the families of those colleagues that have lost their lives to Covid-19. Since the beginning of the crisis, keeping our colleagues safe has been our overriding focus. Colleague and consumer safety will continue to guide everything we do as we move towards reopening more units over the months ahead.
"The first five months covered by the results we are announcing today showed a continuation of the strong performance we reported last year, but it goes without saying that Covid-19 has changed everything.
"Compass is a resilient and adaptable organisation and we have moved quickly to manage cash and costs and increase liquidity. We are doing all we can to protect jobs by redeploying colleagues into units that remain open and using government job retention schemes where available."
