C&C Group Plc launches £151mln rights issue as it looks to Covid recovery

() has launched a rights issue aiming to raise £151mln designed to put the cider maker in a ‘position of strength’ as it emerges from the pandemic.

The Magners and Tenants owner said the injection of cash would allow it to deleverage, boost liquidity and help it manage near-term uncertainties.

It will give the company a supportive capital structure through further potential disruptions from Covid‑19 and deliver on its strategy once unrestricted trading resumes.

“The group will be positioned to emerge from the pandemic in a position of strength and deliver on its ambition to be the preeminent brand-led number one independent ‘final-mile’ drinks distributor across its core markets and to generate long-term sustainable value for shareholders,” C&C said in a statement.

In terms of its current trading C&C said it has responded quickly to rapidly evolving demand in the UK as on-trade outlets reopened, and, it noted that Irish hospitality is due to reopen from early June.

C&C added that as 80% of its pre-Covid revenues came from the hospitality sector the pandemic has had an unprecedented impact on its business, and, it highlighted performance previously during periods where restrictions eased when the group returned to profitability and cash generation.

The company said it is cautiously optimistic about trade recovering in the coming financial year and said it expects to continue to play an important role in the UK and Ireland drinks market.

“While we are confident in our business model and strategy for growth, the group continues to face uncertainty driven by the significant lockdowns and trading restrictions implemented in our key markets and their ongoing impact on the hospitality sector,” said David Forde, C&C chief executive.

“As the hospitality sector emerges from the pandemic, the proceeds raised will ensure the business is equipped with the capital structure, financing and balance sheet strength to achieve sustained growth.”

Rights issue details

Shareholders will receive 6 rights for every 23 C&C shares they own, and can take up their allocation for 186p per new share.

The rights issue is fully underwritten by Barclays Bank and .

Dealing begins in the nil paid shares on May 27 and ends at the close of business on June 11, CREST settlement of nil paid shares is due by June 15 and the fully paid new shares will begin trading on June 21.