British electrical retailer AO World revealed it is looking to raise £40m today to shore up its balance sheet just days after its share price plunged amid fears over its cash reserves.
It was revealed earlier this week that a third-party credit insurer serving some of the firm’s suppliers had slashed its cover in light of “post-covid” sales levels, sending its shares plummeting.
Shares shed almost a third of their value over two sessions following reports of the rebased cover, with the stock trading down around 57 per cent this year.
Bosses said today that the proceeds of the capital raise will “strengthen the balance sheet” and increase liquidity “back to historic levels”.
Bankers at Jefferies and Numis have been called in to work on the fundraise, with new shares offered on the PrimaryBid investment platform.
Bolton-based AO world has suffered a turbulent post-pandemic period after a lift in sales during lockdowns, and said last month it would close its struggling business in Germany as its prospects were deteriorating.
Bosses said today the firm also “continues to rationalise, simplify and refocus its UK operations” , and estimates it will “generate at least £25m of benefits by 2025”.