As the coronavirus pandemic continues to roil markets and send the global economy grinding to a halt, some firms have decided now is the time to ask investors to open their wallets with multiple groups having undertaken fundraisings in the last week.
However, while some companies are raising fund to potentially take advantage of opportunities exposed by the downturn, other are hoping the funds will shore up their balance sheet just enough for them survive the unfolding economic collapse.
One of the firms announcing an emergency cash call is cruise firm Carnival PLC (LON:CCL, NYSE:CUK), which in early April unveiled a massive US$6.25bn recapitalisation which it said will be used for “general corporate purposes” after saying previously that it trying to “preserve financial flexibility” amid the pandemic.
The FTSE 100 firm has had to cancel all its North American cruise lines for at least a month and moored its Princess Cruise lines for at least 60 days because of government lockdowns and an understandable drop in global demand for cruises and other holidays due to the spread of coronavirus.
A number of Carnival’s Princess cruise liners have also made headlines recently, with the Diamond Princess held in quarantine off Japan in February, the Grand Princess denied entry to its home port of California last month and the Ruby Princess becoming one of Australia’s largest sources of coronavirus cases.
The newsagents’ chain has been battered by closures of its stores in airports and train stations as governments implement travel restrictions.
The fundraise was also a condition to receive a new loan of £120mln.
In late March, the FTSE 250 firm, which also operates food and drink outlets in airports and train stations, raised £216mln after warning the pandemic could cause its revenues for March to drop by between 40%-45% while also knocking £50-£60mln off its operating profit.
In another sign of the times, temporary seating specialist Arena Events Group PLC (LON:ARE) has moved to support its balance sheet with a £9.5mln share placing in addition to a £4.75mln loan from HSBC.
Arena has been hit hard by the cancellation of all sporting and social gatherings, including two of its biggest events the Wimbledon tennis championship and The Open golf tournament.
However, following the cash call the company has said it is now in a strong financial position to weather the current crisis.
At the other end of the spectrum, some firms are taking advantage of the crisis to raise cash as their sectors look set to profit from changes to business and consumer behaviour brought on by quarantine measures.
MelodyVR is a platform that allows music fans to watch live concerts in virtual reality regardless of their location, a situation that has become reality for many in recent weeks as government quarantine measures have banned mass gatherings and shut down concert halls across the world.
The AIM-listed firm raised £14mln in what it said was a “heavily oversubscribed” placing to fund the trial of its interferon-beta treatment in coronavirus patients.
The treatment, SNG001, is an inhaled formulation that is currently being developed to treat people with chronic obstructive pulmonary disease (COPD) by protecting their lungs against viral respiratory infections such as coronavirus.
Assura PLC (LON:AGR), meanwhile, is looking to capitalise on the likely need for more healthcare facilities, raising around £185mln last week to pay for developments and acquisitions of GP surgeries and other primary care services.
The company said it had, before the first coronavirus case in the UK was reported, a £165mln pipeline of opportunities for developing new properties and acquiring others, although this had continued to grow in the past few months.
READ: Supermarket Income REIT plans £75mln fundraising as it eyes ‘attractive opportunities’ across marketplace
Elsewhere in the property sector, investment trust Supermarket Income REIT PLC (LON:SUPR) has raised £75mln from investors to fund the purchase of two assets with a price tag of about £115mln, and has also not ruled out “the possibility of acquiring additional assets”.
Looking ahead, it is likely more firms on shaky financial ground may need to tap the market to bring in more cash.
One such firm is NMC Health PLC (LON:NMC), which is currently under the control of administrators after its share price more than halved following concerns over its financial statements earlier in the year.
The firm has revamped its board composition with a number of non-executive appointments with restructuring experience and is now in the process of trying to stabilise its business.
In order to keep its operations going, particularly with the company’s medical capabilities in demand amid the pandemic, the new management may need to convince investors that it has turned a corner and that it can be trusted with a new capital injection.
Meanwhile, Africa-focused airline Fastjet PLC (LON:FJET) is under the cash, with its operations in Zimbabwe suspended after both the country and neighbouring South Africa introduced travel bans to contain coronavirus.
As of 23 March, the group’s cash reserves were at US$2mln (£1.7mln), and on 12 March said it had agreed with its main creditors to defer payments on loans, saying it expected to have enough funding to last until June, however, the grounding of its fleet is likely to increase its cash burn which could put this time frame in doubt.
Finally, while it may need to approach the market for funds, it could be a little too late for troubled shopping centre owner Intu Properties PLC (LON:INTU), which has been battered yet again as the UK’s coronavirus lockdown and store closures have led to a plunge in footfall at its sites.
The company said previously that it is renegotiating its bank covenants and the cash from the sale of its Puerto Valencia shopping centre in Spain, around £95mln, has also been delayed.
With a previous £1.5bn emergency fundraiser fell through at the start of March, it is unlikely that the company has any ammo left to tap the market, and may instead have to pin its hopes on the government’s £330bn support package to help its commercial tenants pay their rent.
–Adds additional company fundraisings and NMC Health details–
Published at Tue, 14 Apr 2020 13:13:00 +0000-Firms undertake fundraisers to either survive or exploit coronavirus crisis