Conviviality to raise £125 million as it issues profit warning
Bargain Booze owner Conviviality has taken the first steps in launching a £125 million fundraising as it looks to recapitilise its struggling business.
In an update last night, Conviviality said: “The board believes that the placing is the most appropriate mechanism to recapitalise the business. However, the company continues to explore other funding alternatives in the event that the placing is unsuccessful. If the company is unable to raise funds by way of the placing or otherwise, it is unlikely to be able to trade on a going concern basis.”
The company said the equity placing would resolve overdue payments with its creditors, settle payments with HMRC, fully repay the company’s £30 million revolving credit facility, and provide working capital headroom.
Earlier this week, Conviviality’s chief executive, Diana Hunter, stepped down after the company issued two profit warnings in the space of a few days and revealed an overlooked tax bill to be paid to HMRC.
Last night, the company also gave a trading update in which it said adjusted EBITDA for the year ending 29 April 2018 is now expected to be in the range of £45.5 million to £46 million. This follows the company’s announcement last week that EBITDA was likely to come in at between £55.3 million and £56.4 million.
If the placing is successful, the company intends to make an open share offer to all shareholders up to the pound sterling equivalent of €5 million.
Both the placing and open offer are subject to the approval of Conviviality shareholders at a general meeting of the company.
