Coronavirus: Hays shares slide after £200m issuance announcement
Shares in global recruitment firm Hays have tumbled after it announced it will issue £200m of shares in an emergency move to help it shore up its balance sheet during the coronavirus pandemic.
Hays said in a trading update this morning that “Covid-19 has driven a very material deceleration in client and candidate activity”. It said operating profit for the year ending in June is likely to be well below the £190m predicted by analysts.
“These are hugely challenging times,” said Alistair Cox, Hays chief executive. “The past few weeks have been unlike anything the world has seen in modern times and has severely impacted recruitment markets.”
In a sign of the damage coronavirus is wreaking on the economy, US jobless claims shot up to 3.3m last week, by far the highest on record.
The £200m share issue will “will leave the company with a stronger balance sheet, working capital and liquidity position during this period of unprecedented disruption,” Hays said. The recruiter said it represents approximately 12.4 per cent of its existing issued ordinary share capital.
Hays shares fell seven per cent to 101.8p in morning trading, however, as existing investors were diluted. They have fallen more than 40 per cent this year so far.
In a bid to signal confidence in the company, Hays said certain directors would subscribe for new shares, contributing in aggregate £100,000.
Hays also announced its board has taken the decision to cancel the 1.11p per share interim dividend which was due to be paid on 9 April.
It added that it is “confident that we will secure significant tax payment deferrals of more than £100 million across the UK, Germany and Australia” following “positive discussions with fiscal authorities”.
Hays has £35m pounds in net cash as of 27 March, it said, with £165m pounds in undrawn credit facilities.