May 6, 2020 / 6:37 AM / a month ago

National Express plans equity raise to reinforce balance sheet

(Reuters) - British transport company National Express Group (NEX.L) said on Wednesday it planned to raise equity of around 20% of its issued capital to shore up its balance sheet as it secured debt waivers through 2020 to help its business during the COVID-19 pandemic.

The company, which has seen a collapse in activity due to nationwide lockdowns, said the group’s core profit in 2020 would fall about 40% under a modeled downside scenario.

National Express, which operates buses, coaches and rails across eight countries, reported a rise of nearly 9% in revenue for the first three months of the year.

Like most companies, National Express has resorted to cutting costs by suspending its UK coach network, cutting pay for executives and putting capital spending on ice.

The company said it continued to generate positive cashflow and earnings due to cost cuts and its reliance on contracts for the bulk of its revenue.

“Whilst the next few months will remain uncertain, we are already seeing a number of growth opportunities,” Chief Executive officer Dean Finch said in a statement.

With about 1.3 billion pounds in cash and undrawn credit facilities as at April-end, National Express said it aimed to reintroduce dividend in July 2021.

Reporting by Yadarisa Shabong in Bengaluru; Editing by Bernard Orr and Anil D'Silva

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