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COVID-19: Wagamama owner goes cap in hand to shareholders as losses deepen


The owner of the Frankie and Benny’s and Wagamama restaurant brands has announced plans to raise £175m while revealing a huge toll on its finances as the coronavirus crisis continues.

The Restaurant Group (TRG) said the share sale should be the final step in actions taken to date to shore up its finances as a result of 12 months of disruption to trading because of COVID-19 pandemic restrictions.

It revealed a 57% plunge in revenues during 2020 and an annual pre-tax loss of £128m compared to a figure of £37m over the previous 12 months – a time when trading was already suffering amid cautious consumer spending.

The company has reacted to the crisis facing the hospitality sector by permanently closing 250 of its 650 restaurants, cutting 3,000 jobs in the process. Wagamama was the only brand in its stable to be spared.

It said that while group dine-in sites had been hammered to date through periods of enforced closure, delivery and takeaway sales at Wagamama had more than doubled from pre-pandemic levels.

TRG said it was cautious on the outlook as venues will only be able to reopen outside-only from 12 April, under PM Boris Johnson’s roadmap out of lockdown for England, while dine-in sites will be closed until 17 May at the earliest.

A closed Wagamama in Greenwich, London, during England's third national lockdown to curb the spread of coronavirus. Picture date: Sunday February 14, 2021.
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Wagamama was bought by TRG in 2018 and has become the jewel in its crown

But chief executive Andy Hornby told Sky News he thought the worst was behind the company and wider casual dining sector which has been among the worst hit areas of the economy.

In an interview with Ian King Live, he said there were “no plans” for further closures as it had kept an eye on likely future demand when it announced the cull last year.

Shares rose more than 8% at one stage to 129p as it revealed discounted terms for its share sale.

The company said it would issue 95.9 million new shares to investors at a price of 100p-per share and 79.7 million new shares to existing shareholders.

The offer would give them five new shares for every 37 existing shares, also for 100p.

Mr Hornby confirmed the offer was fully underwritten:

He told investors: “The capital raise announced today, alongside the debt re-financing announced last week, represents the last important step in our re-structuring process and provides TRG with the long-term flexibility to invest in growing our business.

“Whilst the sector outlook remains uncertain, and we are mindful of continuing restrictions across the UK, we are confident that the actions announced today will allow us to emerge as one of the long-term winners.”

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “There is no doubt the group is in pretty dire straits right now.

“Sales plummeted by 57% in 2020 and with their sites still mothballed, cash burn is intense, at around £5.5m a month.

“The extension of the furlough scheme and the VAT cut to 5% were welcome announcements in the budget but they are like sticking plasters for a company that has sustained a serious injury.”



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