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Recruiter Hays raises $248 million in equity to cope with coronavirus hit

(Reuters) - One of the world's biggest recruiters, Hays HAYS.L, raised about 200 million pounds ($248 million) via a new share issue on Thursday, seeking to prop up its finances in the face of an expected collapse in fees due to the coronavirus.

Unveiling measures to stabilise its business, the company said the health crisis had driven a “very material deceleration in client and candidate activity” and that under its modelled scenario net fees could fall about 35% by the end of 2020. [nFWN2BP1FZ]

“The past few weeks have been unlike anything the world has seen in modern times and has severely impacted recruitment markets globally,” Chief Executive Officer Alistair Cox said in a statement.

Hays said about 210.5 million new shares were placed and subscribed at 95 pence per share, a roughly 13% discount to Wednesday’s close.

Shares of the FTSE 250 company, which earlier touched their lowest level since July 2016, were down more than 9% at 99.3 pence at 1341 GMT. They have fallen more than 45% in 2020.

“While there will be some surprise at raising money, as the group should be able to navigate through without it, we see it as an astute move,” Barclays analysts Paul Checketts said.

Recruiters are among businesses most exposed to the downturn as companies cut costs and halt new hiring, while lockdowns drag out employment processes.

Hays, which is largely focused on hiring for white collar roles, said it expected the impact of the virus to be “substantial” and profit for the year ending June 30 to be materially below market expectations.

Finance Director Paul Venables expected the downturn to be “more difficult” than the global financial crisis.

“We think it makes sense to raise equity now,” he said. “This makes sure that whatever the phase of the downturn is, however long it continues, we will be in a cash positive position throughout that period of time.”

Like its peer Robert Walters RWA.L, Hays has cancelled its dividend and implemented cost reductions ranging from stopping hiring to cutting management pay. It expects it could save up to 20 million pounds per month by December. [nL4N2BQ1KA]

Hays, which has been expanding in Europe, Asia and the Americas, had 35 million pounds in net cash as of March 27, it said, with 165 million pounds in undrawn credit facilities.

(This story was refiled to drop extraneous word ‘it’ in paragraph 9.)

Reporting by Yadarisa Shabong in Bengaluru; Editing by Andrew Cawthorne and Edmund Blair

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