William Hill PLC (LON:WMH) has raised £224mln in a cashbox placing and said online net revenues have recovered in recent weeks but still remain negative.
The bookmaker confirmed the issue of 175mln shares, or 19.99% of its outstanding equity, at a price 128p per share on Wednesday morning, an 8% discount to the close price last night when it announced the fundraising.
Since its last update in the middle of May, the FTSE 250-listed group said its cash burn has reduced from the £12-15mln at that point and it has repaid the £203m outstanding on a 2020 bond.
There is now more than £500mln of liquidity available and “a line of sight to generating positive cash flow” in the second half of the year after both online and US trading has been ahead of expectations in recent weeks.
Furthermore, as it looks to cut net debt from the £535mln at year-end, the bookie expects to receive a VAT refund of around £200mln from HMRC in the second half of the year.
For the past six weeks, as the number of sports events have increased, UK online net revenues were down 3% year-on-year compared to the 33% decline in the previous six.
In North America, net gaming revenue was down 62% in the past six weeks, compared to 90% in the previous six, with the restarting of NBA basketball approved along with other spotting events and reopening of casino venues expected to help trading improve.
“While we remain cognisant that sports betting activity and retail footfall are likely to remain uncertain throughout the rest of 2020 and into 2021, our mitigation strategies have reduced costs, retained liquidity and ensured that capital expenditure related to growth plans has been preserved,” the company said.
“Our product development plans remain a priority, especially in the US, where they have accelerated to ensure we emerge from this period of disruption in a stronger competitive position.”
The shares fell 5% on Wednesday morning to 131.35p.
The return of the English Premier League from today should further improve the UK trend and return the operation back to growth, said analysts at broker Shore Capital.
“Overall, we are encouraged by the continued improvement in trading, which is set to strengthen further and return the group to profitability, whilst the placing and HMRC inflow further strengthens the balance sheet.”
Pre-coronavirus, the broker estimated William Hill was on-track to deliver EPS of around 14p per share in the current year, or nearer 11p post equity raise, excluding US expansion, which the analysts now suspect will be delayed a year “given the potential cyclical impact from the current crisis, let alone the uncertainty over the continuation of the outbreak”.