Bapcor launches $210 million capital raise
16 April 2020, Written by David Simmons
Car parts retailer Bapcor (ASX: BAP) is raising $210 million in an effort to reduce debt and build a cash foundation to see the Covid-19 crisis through.
The fully underwritten institutional placement of $180 million and a non-underwritten share placement plan of $30 million will be used to reduce the company's net debt position.
Following the placement Bapcor will reduce debt to $252 million, including $231 million of cash.
As at 31 March 2020, the company had net debt of $429 million.
Investors can get in on the institutional placement at $4.40 per share, representing an 8.5 per cent discount on the last closing price of $4.81 on Wednesday 15 April.
The capital raise is complementary to a range of cost saving initiatives implemented by the company to preserve and manage cash flow during the Covid-19 crisis.
These measures include closing two thirds of its store footprint in New Zealand where stringent government restrictions have reduced demand for the business' goods and services. New Zealand revenue is down approximately 85 per cent in the first seven days of April.
In Australia all stores remain open but with a reduced number of staff.
The company has also reduced board and executive salaries, eliminated all discretionary expenditure, and has approached landlords for rent relief.
The measures come on the back of a whirlwind March for Bapcor. During the month the company's Australian revenue increased by 15.6 per cent, albeit with trading deteriorating toward the end of the month into April.
Over in New Zealand revenue declined by 16.1 per cent compared to March 2019 as a result of store closures and the impact on customer demand due to extensive lockdown measures.
According to Bapcor CEO and managing director Darryl Abotomey the company is well placed to survive the Covid-19 crisis because of the sheer variety of goods and services offered by business and the essential nature of the group's services during the pandemic.
"We are benefiting from the diversity across our business segments," says Abotomey.
"Our largest business segment, Bapcor Trade, performed well through March but has seen the impact of Covid-19 government imposed restrictions in April with month to date revenue down approximately 20 per cent vs. expectations.
"As a market leader with scale and a solid financial position, Bapcor is well positioned to respond to the changes caused by the Covid-19 disruptions and continue to serve our customers through this period."
Business News Australia
Author: David Simmons