C&C secures 95% take-up for £151m rights issue

C&C Group said on Monday that its £151 million (€175.9m) share sale to existing investors secured almost 95 per cent take-up, helping the drinks company to shore up its finances amid a phased easing of pub restrictions on both sides of the Irish Sea.

The Irish-based but London-listed company behind Bulmers and Magners cider and Tennents lager said that brokers working on the transaction – Barclays, Davy, HSBC and Numis – had found buyers in the market for the 5.09 per cent of stock not taken up in the so-called rights issue.

The brokers had otherwise guaranteed to take up any shares that were not successfully placed as underwriters of the deal.

C&C’s launch of a rights issue, expanding the number of shares in circulation by more than a fifth, came as a surprise to the market when it was announced in late May. Still, the timing of the equity-raise was aimed at taking advantage of renewed optimism around hospitality as Covid-19 restrictions continue to be relaxed as vaccination programmes gather pace.

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The company, led by chief executive David Forde since November, last month reported a record operating loss of almost €60 million for its financial year though February, more than twice what the market had feared, as sales slumped amid the pandemic.

The company moved quickly at the outset of the pandemic in March last year to raise €140 million in the US debt market to shore up its cash levels.

It also negotiated covenant waivers from its existing bank lenders as earnings plunged; availed of more than €26 million of wage supports, mainly from the UK government, as it furloughed two-thirds of its 2,950 employees; scrapped executive bonuses; and secured deferrals on €77.4 million of scheduled tax payments.

Market value

However, these were only temporary measures for a company that had net debt of €441.9 million, including leases, and a market value of €998 million at the end of February – particularly as Covid restrictions have continued for much longer than expected.

The fresh equity raise will allow C&C to enjoy looser lending covenants with its banks until the end of August 2022. It will also give the company firepower for deals and other opportunities that may fall out of the crisis, according to analysts.

Shares in C&C were up 0.8 per cent in early trading in London, at almost £2.31. The new stock had been offered at a discounted price of £1.86 each.