Virus-cruelled travel firm Flight Centre is tapping investors for $700 million as business grinds to a halt amid widespread travel bans and shutdowns.
Managing director Graham Turner has also announced the company had secured an extra $200 million loan from existing lenders to stop it becoming one of the businesses that will be wiped out by the pandemic.
Flight Centre has already laid off 6,000 of its global sales and support staff and plans to close more than half of its global leisure shops, including more than 40 per cent of Australian shops, as quarantine measures hammer the industry.
The company is also considering selling its Melbourne CBD office as customer volumes slow to a trickle.
Mr Turner said the cost-saving measures would help Flight Centre reduce annual operating costs by $1.9 billion by the end of July.
“It is, without question, the most challenging period we have encountered in over 30 years in business and it is inevitable that some businesses across our industry will fail, given the significant loss of revenue that they will be experiencing now and for at least the next few months,” Mr Turner said in announcing the capital raising on Monday.
“With this funding in place and additional liquidity, we are in a much stronger position and are well placed to weather a prolonged downturn, which currently seems the likely scenario, and to then take advantage of the significant opportunities that will arise once conditions normalise.”
The firm’s fully underwritten raising comprises of a $282 million institutional placement at $7.20 per share, representing a 27.3 per cent discount to the last traded price of $9.91 on March 19, before the trading halt in Flight Centre’s shares.
The placement is being conducted on Monday.
Flight Centre will also hold a $419 million 1-for-1.74 accelerated pro rata non-renounceable entitlement offer, including a fully underwritten institutional entitlement offer to raise $280 million and a fully underwritten retail entitlement offer to raise $138 million.
The Placement and the Entitlement Offer will result in the issue of about 97.2 million new shares, representing about 96 per cent of existing shares on issue.
The new shares will rank equally with existing shares on issue.