National Express set for equity raise to strengthen balance sheet
National Express has announced the placing of up to 19.99 per cent of the coach operator’s share capital to further strengthen its financial position through the coronavirus crisis.
The firm said that in its worst-case scenario, profit could fall up to 40 per cent in 2020.
The company said that the move had the “unanimous support” of its board, some of whom will contribute approximately £1m to the placing.
The bus firm also said that it had set an “aspiration” to reintroduce its dividend in 2021.
National Express, which has already secured £1.3bn in additional liquidity, said that the placing would allow it to reduce its liquidity and position it for investment opportunities as the current pandemic abates.
Chief executive Dean Finch said that a stronger balance sheet would be a source of “differentiation and competitive advantage” after the pandemic:
“National Express went into this pandemic as the leader in all the markets we serve. Whilst the next few months will remain uncertain, we are already seeing a number of growth opportunities as existing and potential new customers seek a financially secure and reliable operating partner”, he added.
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The firm said that in its worst-case recovery scenario, demand could remain 25 per cent down through to the end of 2021.
In a trading update released this morning, the firm said that due to stringent cost management measures it had continued to generate cash despite the shutdown.
To offset declining incomes due to the pandemic, National Express has suspended its UK coach network, placed staff on the government’s job retention scheme and put its spending plans on hold.
In addition, all members of the board and group executive have taken voluntary pay sacrifices in light of the pandemic.
Having suspended its dividend in its previous trading update in April, the company confirmed it intended to reimplement it “at the earliest prudent opportunity”.
It said that it was targeting July 2021 to do so.