The City Pub Group PLC (LON:CPC) surged on Friday as it unveiled plans to raise £22mln to strengthen its balance sheet after the coronavirus pandemic forced the closure of its pub estate.
The AIM-listed firm has already raised £15mln through the placing of 30mln new shares at 50p each, a 10.7% discount to its Thursday closing price, to certain existing shareholders and other institutional investors.
The remaining £7mln will be raised through an open offer to qualifying shareholders at the same price.
CPC said the proceeds will be used to “strengthen” its balance and also to expand its pub portfolio “at a time when the directors' believe acquisition prices will be reduced in the short term”.
The placing was conducted through an accelerated bookbuild by broker Liberum.
As part of other measures to preserve cash during the pandemic, the company said it had taken several actions to “significantly reduce its monthly costs” including reductions in staff numbers, unpaid leave and salary sacrifice.
The firm’s directors have also taken a 50% pay cut until its pubs reopen, while training and recruitment have also been halted.
However, the company said it the fundraising was successful, it will be "well placed to grow the business and recover shareholder value once its pubs reopen".
“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”, said CPC’s executive chairman, Clive Watson.
“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”, he added.
The results of the placing sent the shares surging 18.9% to 66.6p in mid-morning trading.
--Adds results of placing and update share price--