March 25, 2020 / 7:41 AM / 6 days ago

Travel food firm SSP launches huge cash call, shares rise

(Reuters) - British travel-food company SSP (SSPG.L) launched an emergency issue of shares worth 20% of its share capital on Wednesday as it laid off staff and cut spending to try and ride out the coronavirus-driven collapse in air travel.

The company said it had agreed a new 112 million pound, 18-month credit facility with HSBC, Lloyds and Natwest banks, subject to it completing a new issue of shares, which would bolster its cash reserves.

It also said it expected to qualify for the UK government’s scheme for supporting businesses through the coronavirus shutdowns.

Shares in the company jumped almost 9% in early trade amid a recovery in the London stock market.

The company, which operates food and beverage outlets in airports worldwide, also deferred payment of its final dividend to June and said that it would not pay a dividend for the first half of 2020, while also suspending share buybacks.

SSP said it had temporarily shut units and cut others’ opening hours and was halting new openings planned for the second half of the year, while cutting salary across its senior management “significantly”.

On debt issues, it said that it was confident in its ability to meet its covenant thresholds on March 31 and expected to have up to 200 million pounds of cash and undrawn committed facilities, before the new funding, at the end of the first half.

It forecast March revenue to drop by up to 45% compared with a year ago, reducing revenue by about 125 million pounds to 135 million pounds and operating profit by up to 60 million pounds.

“Looking into the second half of the financial year ... SSP’s central planning assumption is that recent trading conditions seen through March 2020 will likely deteriorate further,” the company said.

Reporting by Tanishaa Nadkar in Bengaluru; editing by Patrick Graham, Aditya Soni

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