London: Whitbread Plc, the UK's largest hospitality company, plans to tap investors for 1 billion pounds ($1.2 billion) via a share sale to help see it through the coronavirus pandemic that's shut restaurants and hotels.
The owner of the Premier Inn chain launches the rights offer as it takes "decisive action" to reduce cash outflows and enhance liquidity, it said in a statement. Lenders have already agreed to waive covenants on debt for 18 months, and Whitbread suspended its dividend.
"Optimizing the balance-sheet in this way will enable the business to be in the best possible position to continue investing and taking market share in our fragmented sector when the current situation normalizes," CEO Alison Brittain said.
With most of Whitbread's hotels in the UK still shut, the company is bearing the brunt of the viral outbreak as other industries gradually restart operations. The group has 27,000 workers furloughed on full pay and is refunding customers at a time when revenue streams are largely closed off.
Brittain is looking to leverage Whitbread's scale as the crisis wreaks havoc among smaller operators in both the UK and Germany, where the company has been expanding the Premier Inn chain. Its sites in Germany reopened on May 11.
"We expect there to be an impact on the competitive landscape and to see a material slowdown in the supply of rooms in both our key markets, and potentially an acceleration in the decline of the large independent sector," the CEO said.