Shares of Manchester-based online holiday retailer On the Beach Group plc (OTB) fell up to 7% on Wednesday as it announced it will raise around £26 million by selling shares in a discounted share placing.
The company’s CEO said the share sale will provide the firm with “greater resilience, flexibility and firepower” as demand for holidays recover.
“On the Beach Group plc … announces the successful completion of its non-pre-emptive placing of new ordinary shares … following yesterday’s announcement,” said the company.
“A total of 7,870,000 placing shares have been placed … at a price of 330 pence per placing share .
“The placing of 7,870,000 placing shares, representing approximately 5.0 per cent. of the company’s existing issued share capital, will raise gross proceeds of approximately £26.0 million.
“The placing price represents a discount of approximately 5.0% to the closing share price of 347.5 pence on 6 July 2021 …”
Announcing the share placing late on Tuesday, On the Beach CEO Simon Cooper said: “The duration of the pandemic and its disruption to the travel sector has been more than anyone could have imagined and whilst On the Beach has undertaken numerous actions to best navigate the crisis, manage risk and conserve cash, this placing will provide the group with greater resilience, flexibility and firepower as demand for holidays recover.
“The group is well funded with £30m of cash as at 31 March 2021 and has access to a £75m undrawn revolving credit facility.
“This fundraise will restore our cash position back to a similar level to where we were following our placing in May 2020.
“The placing will position the group strongly for growth while ensuring On the Beach is able to protect its strong market position and appropriately gain market share when there is an eventual recovery in demand.
“On the Beach’s asset light, flexible model and ring-fenced trust account for customer monies sets us apart from our competitors as our lack of reliance on customer deposits to fund working capital allows us to focus on what is right for the customer.
“As a result of this, the previously announced extension of our off-sale period from 30 June to 31 August 2021 was a decision taken to focus on supporting customers with bookings due to travel this summer and, given the continued uncertainty across the sector as evidenced in Portugal, it appears this was the right call.
“During this period of little to no travel, we continue to maintain, repair and re-invigorate the On the Beach brand, recently launching our ‘we’re ready when you are’ campaign, designed to increase brand awareness, welcoming our customers back when there is more certainty across the short-haul beach holiday market.”