Linen giant Johnson raises £85m as revenue falls 97%

Shares of Runcorn-based textile services provider Johnson Service Group (JSG) fell about 17% on Friday after it raised £85 million selling new stock in a placing and it published a trading update showing revenue in its hotel, restaurant and catering business fell 97% in April.

“Within HORECA, which serves the hotel, restaurant and catering markets, the group has ceased processing at the vast majority of its 18 sites,” said Johnson. 

“Organic growth for the first two months of the year was particularly strong at 9%, aided by Gleneagles and Jurys Inn, however, March 2020 saw volumes reduce resulting in a negative organic growth in the month of 27%. 

“In April 2020, revenue fell by 97% on an organic basis due to the closure of the vast majority of the group’s hospitality customers. 

“Revenues during May 2020 are expected to be slightly ahead of April 2020, as a small number of customers reopen …”

On the share placing, Johnson said: “A total of 73,915,188 new ordinary shares … representing approximately 19.99 per cent. of the existing issued share capital of the company, have been placed by Investec Bank plc, the sole broker and sole bookrunner, at a price of 115 pence per placing share, raising gross proceeds of approximately £85 million for the company.

“The placing price of 115 pence represents a discount of 7 per cent. to the 10 day average closing mid-market price of 123.6 pence per ordinary share and 2 per cent. to the 10 day volume weighted average price of 117.5 pence per ordinary share both ending on 28 May 2020, being the last practicable day prior to the publication of this announcement.”

Johnson Service Group CEO Peter Egan said: “We are pleased by the level of support we have received for this fundraising.

“These proceeds will improve our liquidity position and further bolster our balance sheet, helping to see us through this downturn and ensuring that we are best-placed to quickly restore our market position as our markets start to improve.

“We are encouraged by early signs of some customers reopening across both Workwear and HORECA and remain confident in the long-term prospects of the group.”

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