Upper Crust owner SSP Group plc to raise £475mln via rights issue

PLC () announced plans to raise £475mln via a rights issue to shore up its balance sheet and focus on the 90 new venues in the pipeline.

Conditional to the issue, the Upper Crust owner secured the extension of its bank facilities that were previously due to mature in July 2022 to January 2024, as well as waivers and modifications of the existing covenants under those bank facilities and its US private placement notes.

The FTSE 250 group said these measures will significantly strengthen its financial position, especially in case the global travel sector experiences a more prolonged recovery from the Coronavirus (COVID-19) pandemic.

Under the firm’s base-case scenario, the moves will strengthen its balance sheet and provide increased capacity for investment as the travel market recovers.

It added that it is confident in the medium-term outlook for its end markets but recovery remains uncertain.

Despite the global vaccine rollout, new variants of the virus, vaccine supply constraints and various lockdown and travel restrictions mean the pace of the recovery this year missed the café operator’s expectations towards the end of 2020.

It forecast a near full return of passenger numbers to pre-pandemic levels by financial year 2024, led by a rebound in domestic and leisure short-haul air and rail travel, with adjusted underlying (EBITDA) margins returning to 2019 levels in the medium term.

“Given its exposure to the travel sector, the shares have lagged behind the rest of our coverage and remain c49% below pre-covid levels (market-cap 39% below pre-Covid levels),” analysts at Liberum commented. 

“We therefore see upside to the share price at current levels and expect SSP to be a long-term winner and consolidator.”

Shares shed 3% to 334.98p early on Wednesday.

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