Cafe-bar chain Loungers has cut directors' pay, extended its credit facility with its banks and raised millions of pounds with a share placing on the London Stock Exchange.
The company, which was founded in Bristol but operates 167 Lounge and Cosy Club sites across the UK, placed a total of 9,250,000 new ordinary shares, raising gross proceeds of around £8.3million.
The restaurant group’s current lending banks, Santander and Bank of Ireland, also agreed to provide the company with a £15million revolving credit facility for an 18-month period.
Loungers said the move would give it enough capital to manage throughout the Covid-19 crisis and in the event sales are impacted into 2021.
It added that it would also help the company re-start the roll-out of new sites after the crisis had ended.
The funding follows a number of measures Loungers has taken to remain liquid since branches were closed in March, including cutting directors’ pay by 50 per cent while sites are shut (20 per cent deduction and 30 per cent deferral until the sites are re-opened).
A total of 99 per cent of the company’s employees, including all restaurant staff and most head office workers, have been furloughed via the Government’s Coronavirus Job Retention Scheme.
The business says a “skeleton staff of business-critical” employees have been kept on during the closure period and to prepare for the re-opening of its sites.
As at April 17, the company had £4.1million in cash on its balance sheet, undrawn facilities of £3.0million and net debt of £35.4million.
Loungers completed its IPO on April 29, 2019, and at the end of last year it announced plans to open hundreds of new Lounge and Cosy Club sites.
