Rank Group Plc has quelled press speculation that it will undertake a new share placement to raise working capital to help its venues and properties mitigate autumn lockdown proceedings and further COVID-19 impacts.
The LSE gambling group issued its response to a Sky News report, which detailed that Rank would pursue a £70 million emergency funding round, undertaken through a new share placement valued at 20% of the firm’s equity.
Sky News noted that Rank’s transaction would be a controversial move for its existing shareholders, placing a significant slice of corporate equity at a discount rate, as the COVID-19 pandemic has seen Rank’s LSE share price drop from a February £3.22 to 88p as of 1 November.
Responding to news reports, Rank stated that it held a duty with its financial advisers to constantly review the firm’s financial position and funding options.
Issuing its statement, Rank confirmed that it was reviewing a potential equity issuance of a maximum allowed 19.9% of its issued share capital as a funding option, which is solely intended to strengthen the firm’s balance sheets ‘in this unprecedented trading environment’.
Rank underlined that no such transaction had been authorised, and there could be no certainty that any equity issuance will proceed.
In its interim statement, Rank disclosed that it would retain £140 million in available cash to help its facilities, whilst the company underlined that it would meet all its 2020 bank covenant demands irrespective of COVID-19 impacts.
Stating that Rank had used a ‘£10 million cash burn‘ to maintain its Grosvenor Casino and Mecca Bingo properties during lockdown, the Group CEO John O’Reilly had previously written to Chancellor Rishi Sunak demanding that HM Treasury set aside an economic rescue package for the leisure and hospitality sector.