WH Smith raises £166m to shore up finances during Covid-19 crisis

WH Smith has successfully raised almost £166m from investors after launching an emergency cash call to shore up its balance sheet while the majority of its shops remain closed during the coronavirus crisis.

The retailer managed to place 15.8m shares at 1050p per share, representing a discount of 4p on the previous day’s closing share price, and equivalent to 13.7% of the company’s share capital.

The book and stationery chain’s chief executive, Carl Cowling, was among the investors who bought shares.

Shares in WH Smith have fallen by 56% since the start of the year but rose by as much as 4% during early trading on Tuesday.

UK government support for workers and businesses during the coronavirus crisis

Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees.

Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies.

Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.

Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000.

Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits.

Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills.

Local authorities to get a £500m hardship fund to provide people with council tax payment relief.

Mortgage and rental holidays available for up to three months.

A day earlier, the company said it had secured a new lending facility of £120m, conditional on completing the equity raise.

WH Smith issued a profits warning in March as travel restrictions triggered by the coronavirus pandemic led to a significant drop in shoppers at its airport outlets, initially in the Asia Pacific region, which accounts for 5% of its travel division’s revenues. The company stated that its annual profits would be half the £80m previously forecast.

WH Smith is currently operating about 30% of its UK stores but has reported a “significant decline in passenger numbers” because of the nationwide lockdown, which has resulted in the temporary closure of all of its stores at British airports and railway stations.

The firm’s 140 stores located in UK hospitals remain open, along with its 203 stores that contain Post Office counters.

The group says the duration of the pandemic and effect on its financial performance remains uncertain, and it expects its April revenue to fall by 90% compared with the previous year. It is expecting 95% of its shops worldwide to remain closed and to reopen gradually.

Richard Chamberlain, an analyst at the Royal Bank of Canada, said WH Smith had been showing promising signs in the travel retail sector prior to the outbreak of Covid-19: “We think it should be a longer-term beneficiary of a recovery in travel trends, while its hospitals business and cost savings such as business rates provide some offset to very high short-term pressure on the air and rail segments.”

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