Safestyle launches placing to raise £8.5m amid Covid-19 lockdown
Safestyle has announced a placing to raise £8.5m to strengthen its balance sheet and help see it through the coronavirus outbreak.
The AIM-listed window and door manufacturer said 50 million shares will be placed at 17p each with institutional and other investors, by way of an accelerated bookbuild to be launched immediately.
Proceeds from the placing will be used to strengthen the balance sheet "so that the business is well capitalised and has a strong cash buffer to ensure it can continue in business through and out of the current crisis relating to the Covid-19 outbreak".
Following completion of the placing, Safestyle’s banking covenants will be waived for up to six months to apply for the entire shutdown period and a reduced EBITDA covenant target will be in place for the rest of the year following resumption of trading.
As part of the strategy to strengthen its financial position, the company has reached agreement with its primary lender, Aurelius, in relation to its £7.5m facility, which comprises a £4.5m term loan and a £3m revolving credit facility.
Without the placing and if the current pandemic shutdown continues beyond the end of June, Safestyle said it will lack the funding to underpin the business.
"Specifically, without the proceeds of the placing and the consequent satisfaction of the condition to the amending of its banking arrangements with Aurelius, should the UK Government's 'Stay at Home Measures' be extended beyond the end of June 2020, the company could be at risk that it will not be able to continue trading as a going concern and the company could then be unable to comply with one or more financial covenants that are in place under the terms of its existing facilities with Aurelius."