City Pub raises £15m in placing to help weather Covid-19
City Pub Group has successfully raised £15m in a share placing to help the company weather the impact of the coronavirus and the closure of its pubs.
The group placed 30 million new ordinary shares at 50p each. It also plans to raise up to £7m through an open offer of 14m new shares to private investors.
Executive chairman Clive Watson said: "We are delighted with the investor support we have had at this difficult time. Together with our existing funding arrangements, this significantly strengthens our balance sheet providing a further cushion in the event the suspended environment is extended.
"The additional funds will also allow improvements to our operational structure during the period of closure and enable us to grow the business and recover shareholder value once pubs are permitted to reopen."
Since the closure of its pubs earlier this week as per government guidelines on Covid-19, the company said it has taken a number of steps to significantly reduce its monthly costs. These include temporary and permanent reductions in the number of employees, unpaid leave and salary sacrifice of staff, a 50% reduction in the salary of directors until the pubs re-open and halting training and recruitment costs.
City Pub will also be pursuing the government's announced support of reimbursement of 80% of employees’ costs for those on salaries of £30,000 a year or less and said it was in talks with landlords about rent holidays. It is also in discussions with suppliers about extending credit terms and plans to submit claims under relevant insurance policies for both Covid-19 and for the shutdown of its pubs
At 1520 GMT, the shares were up 18% at 66p.