The Restaurant Group has announced a proposed £175m capital raise to allow it to invest in the business once the hospitality sector fully reopens.
The company said the move represents the “last important step” in its restructuring process after it secured £500m of new long term debt facilities last week.
The raise – by way of firm placing and placing and open offer – is designed to give it the flexibility to invest in growing its business.
It caps a year of vast structural change for the business in which it has exited 60% of its leisure estate and 50% of concessions sites.
Net proceeds from the fundraising will be used to improve its liquidity headroom to protect against any potential resurgence of the Covid-19 pandemic and accelerate deleveraging to a target net debt to EBITDA below 1.5x in the medium term.
It will also use the cash to capitalise on selective site expansion in its Wagamama and pubs businesses, where it expects there to be good and profitable opportunities. This includes the launch of new restaurants and delivery kitchens.
The group currently has no sites able to trade for dine-in due to current UK restrictions, but is operating delivery and click-and-collect services across approximately 200 sites in its Wagamama and leisure businesses.
It said today that the performance of delivery and takeaway for those sites has been “extremely encouraging” with average weekly delivery and takeaway sales during the last four weeks being 2.5x pre-Covid-19 levels for Wagamama and 5.0x pre-Covid-19 levels for leisure.
CEO Andy Hornby said: “The Covid-19 pandemic has presented enormous challenges for our sector but the TRG team has responded decisively to restructure our business and preserve the maximum number of long term roles for our colleagues. TRG is operationally a much stronger business than 12 months ago.
“The capital raising will significantly strengthen the group’s balance sheet and provides TRG with the flexibility to invest in growing our business. Whilst the sector outlook remains uncertain, and we are mindful of continuing restrictions across the UK, we are confident that the actions announced today will allow us to emerge as one of the long term winners.”