JD Wetherspoon raises £141m as pub chain plans for June reopening
JD Wetherspoon has raised £141m through a share placing to shore up its finances during the coronavirus crisis, as the pub chain gears up for a June reopening.
The equity raise completed this morning will help the company cope with the low sales levels expected when it reopens after the coronavirus lockdown is lifted, it said.
Wetherspoon said that it is working on the basis that its pubs will be closed until late June, and that like-for-like sales will be down 10 per cent in the month after lockdown, increasing by two per cent per month.
The pub chain estimated that total sales could drop 26 per cent in the year ending July 2020, however it was confident in its ability to bounce back.
“The company is likely to make some changes to its operating model, assuming increased social distancing, and anticipates a gradual recovery in customer numbers,” the company said yesterday.
“Wetherspoon pubs are substantially larger than average, and most have outside facilities. The company believes these factors are likely to assist if social distancing measures apply.”
The pub chain has furloughed around 43,000 employees while its venues have been closed, representing about 99 per cent of the workforce. No staff have been made redundant yet, although headcount remains under review, the company said.
Most staff are receiving 80 per cent of their pre-lockdown salaries, with Wetherspoon contributing £600,000 a month to “top-up” payments.
Wetherspoon chairman Tim Martin and chief executive John Hutson will both take a 50 per cent pay cut. Finance director Ben Whitley has agreed to a 38 per cent salary cut while Su Cacioppo, personnel and legal director, will take a 42 per cent pay reduction.
All Wetherspoon non-executives have agreed to a 50 per cent cut.
The business rates holiday announced by the government will also save the pub chain about £60m. It is also considering applying for a loan under the Coronavirus Large Business Interruption Loan Scheme.
In total, 83 per cent of suppliers have been paid and extended payment terms agreed with larger firms. Meanwhile, the majority of rental payments due in March have been deferred.
Wetherspoon has paused its site opening programme which is not expected to resume until 2022, when the company aims to open five pubs a year.