Catering giant Compass Group to raise £2bn to shore up finances during coronavirus crisis
Catering giant Compass Group has launched a £2bn share offer this morning as it seeks to raise extra cash to strengthen its balance sheet during the coronavirus crisis.
Compass, which is the world’s largest caterer, also scrapped its outlook for 2020, saying the coronavirus pandemic has had a “profound impact” on the company.
Many of the company’s food service operations in offices and schools have been closed during the coronavirus crisis.
Compass said organic revenue plunged 20.4 per cent in March and 46.1 per cent in April. The drop through impact of lost revenue on operating profit was 23 per cent last month.
The proceeds of the £2bn share offer announced this morning will be used to strengthen Compass’ balance sheet and liquidity position, it said.
The placing will reduce “leverage to deal with the challenging environment and ensure Compass remains resilient in the event of further negative developments in the pandemic.”
Group chief executive Dominic Blakemore said: “A strong balance sheet will allow us to weather the crisis whilst continuing to invest in the business to enhance our competitive advantages, support our long term growth prospects and further consolidate our position as the industry leader in food services.
“Alongside a placing to institutional shareholders, I am pleased that we are giving our valued retail investors an opportunity to participate in the fundraising through a separate retail offer.
“Although there are significant short term challenges, I firmly believe that Compass is now well-placed to succeed in a post Covid-19 world.”
Blakemore has taken a 30 per cent pay cut and the board and executive committee have reduced their salaries by 25 per cent in order to conserve cash during the crisis.
Compass said it will not recommend an interim or final dividend this year, and has reduced capital expenditure and paused merger and acquisition activity.
The company has increased its committed credit facilities from £2bn to £2.8bn.