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WH Smith has announced its plans to issue equity in order to secure a £120m lending facility amid the ongoing pandemic.
Due to the “uncertain” period of trading, the group plans to secure the loan in order to strengthen its balance sheet, working capital and liquidity position and mitigate the impact of the pandemic.
However, the group said that the new lending facility is conditional on raising new equity. Because of this, the group is at an “advanced stage of preparation” for an equity issue of a maximum of 13.7% of its issued share capital by way of a placing.
In a statement, the group said: “These financing arrangements, coupled with a broad range of mitigating actions to manage the cost base and cash-flow, will provide sufficient liquidity to deal with this most challenging of trading environments.
“A further announcement will be made as and when appropriate.”
The move follows the “substantial downturn in economic activity” that the group has experienced since its last financial update on 12 March, in light of the ongoing Covid-19 pandemic.
The group closed the majority of its stores after the government called for non-essential services to shut, but its Post Office branch sites and hospital stores have remained open.
