Global markets continue to witness the rising cost of the coronavirus outbreak with share placings and calling down debt becoming commonplace as companies move to shore up their balance sheets.
This is the reality for businesses deemed ‘non-essential’ that have been hit the hardest by a prolonged quarantine and are now grappling with the question of long-term survival.
Hostel operator Safestay (AIM:SSTY) was forced to oversee the closure of all hostels at the start of April after the global hospitality sector was sent into turmoil as a result of the pandemic.
The AIM-listed firm announced a £5m overdraft extension with HSBC this week to meet ‘significantly’ reduced operating costs.
Safestay’s Financial Director, Hervé Deligny, discussed the company’s premier hostel offering and their response to the Covid-19 crisis earlier this week.
The funding move is representative of a raft of measures taken across the hospitality network and is aimed at steadying the industry during the crippling lockdown period.
The firm said its cash reserves of £1.4m should enable the business to fund requirements during the period and enable it to be “well positioned” to re-open as restrictions are lifted.
And it’s not just the hospitality industry lining up strategies to its strengthen balance sheets.
Low-cost gym operator, The Gym Group (AIM:GYM) , announced this morning that it had raised £41.3m through an equity placing and subscription to boost liquidity.
The group has been focused on a rescue strategy since it was forced to pause expansion plans in order to retain cash as regular users and new members dropped off amid the crisis.
Shares in The Gym Group perked up 3.02% at 165.86p on Friday morning.
It placed 27.4m new ordinary shares at 150p each representing a 6.8% discount to the closing share price of 161p on Thursday.
CEO, Richard Darwin said he was grateful for support at this time and was confident the business now had sufficient liquidity to weather “the most pessimistic trading scenario.”
Meanwhile, ten-pin bowling operator Hollywood Bowl (AIM:BOWL) detailed plans this morning to raise around £10.9m at more than a 50% discount to the share price seen in February.
The impact of the coronavirus pandemic has been felt hard by the film industry as cinemas were forced to close their doors to customers in a move to curb the spread of the virus.
The group said it experienced a strong financial period until March when the UK government announced lockdown measures which meant temporarily closing its venues.
Shares in Hollywood Bowl were trading on relief at 10.72% higher at 158.32p on Friday.
If all centres remain closed and the furlough arrangements are available throughout the period, the company expects to maintain a positive cash balance until the end of October 2020.
Analysts at Liberum said last week that the bowling group is “uniquely positioned to survive its enforced hibernation and thrive again when restrictions are lifted”.
Looking ahead, the group added that it has committed to spend £1.7m on new centre openings within two months of the lifting of coronavirus lockdown restrictions.
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