Rank Group Plc has quenched press speculation that it will pursue a new share placement to collect working capital to help offset autumn lockdown proceedings and further impacts of COVID-19 on its venues and assets.
The LSE gambling group responded to a Sky News report outlining that Rank will seek an emergency funding round of £ 70 million, conducted through a new share placement priced at 20 percent of the company ‘s equity.
Sky News noted that for its current shareholders, Rank’s transaction would be a contentious move, putting a large portion of corporate equity at a discount rate, as the COVID-19 pandemic saw Rank’s LSE share price drop from £3.22 in February to 88p as of 1 November.
In response to news reports, Rank confirmed that it had a responsibility to regularly monitor the company’s financial situation and financing options with its financial advisors.
Rank indicated that it was evaluating a possible issuance of a maximum of 19.9 percent of its issued share capital as a financing option, which is primarily intended to improve the company’s balance sheets ‘in this unprecedented trading climate’ when issuing its statement.
Rank stressed that no such transaction had been approved and that no assurances could be provided that any issuance of equity would proceed.
In its interim statement, Rank announced that it would maintain £ 140 million in cash available to fund its facilities, while the company emphasised that, regardless of the implications of COVID-19, it would satisfy all its 2020 bank agreement requirements.
The Group CEO John O’Reilly had previously written to Chancellor Rishi Sunak claiming that Rank had used a ‘£ 10 million cash burn’ to retain its Grosvenor Casino and Mecca Bingo assets during the lockdown, requesting that HM Treasury set aside an economic rescue plan for the leisure and hospitality industry.