InvoCare to defer payout, raise $200m


Funerals provider InvoCare is deferring its dividend and will ask investors to pitch in $200 million as a revenue decline accelerates due to coronavirus restrictions on memorial services.

InvoCare on Tuesday announced it will offer 14.4 million new shares at $10.40 – a 7.8 per cent discount to the last closing price of $11.28 – to raise $150 million.

It will also conduct a $50 million share purchase plan to reduce debt and increase liquidity amid the uncertainty of the coronavirus pandemic.

In addition to the share offer, management will defer paying its fully-franked 23.5 cent final year dividend to shareholders until it better understands the impact of COVID-19.

The move comes as average revenue from InvoCare funerals drops amid coronavirus restrictions imposed to limit the number of people at services.

Services in Australia are currently limited to 10 people.

The same applies in Singapore, where InvoCare also trades.

Its revenue in New Zealand has fallen more sharply, where gatherings are not allowed.

“Our ability to offer a full range of services to our client families is being affected by the current restrictions issued by governments on social distancing,” chief executive Martin Earp said.

“We have implemented a series of contingency plans to both reduce the impact of COVID-19 on our business and allow us to continue to meet the needs of our client families during this unprecedented crisis.”

The industry is using video streaming and postponing some services in order to continue.

InvoCare described sales performance since the restrictions as resilient, but warned there could be more impact.

The exact revenue decline per funeral was not specified but is less than 10 per cent, according to InvoCare.

The business will try to extend a debt tranche due to mature in February 2021, and reduce spending.

Shares in InvoCare were $11.28 when trading closed on Thursday April 9 and have lost 14.48 per cent of their value in 2020, against an 18.8 per cent wider market downturn.

A growing list of ASX-listed firms are tapping shareholders for cash to build a buffer against the impacts of the coronavirus pandemic.

Similar moves have been made by Cochlear, Webjet, Flight Centre, Oil Search, Reece, Kathmandu and oOh!media in recent weeks, while insurance giant QBE announced a $US825 million ($A1.3 billion) raising on Tuesday in expectation that several countries will experience “severe economic recessions”.

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