National Express bolsters balance sheet via placement

National Express is raising GBP 235.00 million as part of plans to reduce leverage and boost its financial flexibility to take advantage of growth opportunities as it exits the COVID-19 crisis.

The public transport services provider said BofA Securities and HSBC have placed out 101.92 million new shares, representing a 16.7 per cent post-issue stake, at 230.00 pence apiece.

Concurrently, certain members of the board and the executive management team are directly subscribing for 428,782 new stocks at the same price.

The offering represents a discount of 3.4 per cent to the close of 238.00 pence on 5th May 2020, the last trading day prior to the announcement.

National Express said that despite the significant mitigating actions being taken by the business to reduce costs and improve liquidity, the board decided the balance sheet would benefit from additional financing.

Without the anticipated placing proceeds, the company would have had gearing at the top end of its previous target range of 2.0x to 2.5x at the end of 2021.

It would have therefore have needed to manage its cost base for longer, potentially limiting its ability to take advantage of growth opportunities that might arise after emerging from the COVID-19 crisis.

Proceeds will reduce overall debt and gearing to within a new target range of 1.5x to 2.0x for the end of 2021.

More:  Recursion to grow its pipeline with Vium

Along with recently increased lending facilities, National Express expects to have improved liquidity, more covenant headroom and enhanced resilience to manage the business through this market.

The company added it is already seeing a number of growth opportunities as existing and potential new customers seek a financially secure and reliable operating partner.

Some of these openings include school boards looking to outsource for the first time as, for example, they seek to preserve the capital needed to replace their own fleets going forward.

Others include corporates looking for dedicated shuttle services for staff in the current COVID-19 environment.

Zephyr, the M&A database published by Bureau van Dijk, shows the placing is the 14th-largest capital increase by a UK company announced in 2020 to date.

© Zephus Ltd


More from: | Category: M&A News