On the Beach Group will seek to raise £67.3 million in a share placing as the company positions to survive the collapse in travel surrounding the coronavirus pandemic.
The online beach holiday retailer is offering a total of 26,143,500 shares at a price of 257.5 pence each.
They have been placed with joint bookrunners Numis Securities and Peel Hunt.
In total, the new stock accounts for approximately 19.9 per cent of the company.
Applications have been made to the Financial Conduct Authority and London Stock Exchange, respectively, for the admission of the placing.
The deal will launch on May 27th.
In conjunction, On The Beach has agreed to increase to its existing banking facilities in the form of an incremental £25 million revolving credit facility under the CLBILS with Lloyds Banking Group.
As a result, it now has maximum working capital facilities of £75 million available.
Simon Cooper, chief executive of On the Beach Group, commented: “The fundraising and banking facilities announced today will provide On the Beach with greater flexibility and firepower to ensure the group is ready to take advantage of the multiple opportunities that are likely to arise across the travel industry, as and when the world emerges from the ongoing crisis.
“Importantly, the additional funding will enable the group to consider commercial opportunities simultaneously with a strong balance sheet to support its growth ambitions.
“The funding will also enable the group to increase its online and offline marketing spend to meet pent up consumer demand when it returns, so as to make substantial market share gains and deliver long term growth for shareholders.”
He added: “There is no doubt that the group’s asset light and flexible model, combined with its ring-fenced trust account for customer funds, helps to differentiate On the Beach from its competitors and has stood us apart when providing customers the refunds they are entitled to in these difficult times.”
Until the coronavirus struck, it had been a good year for On the Beach.
In the first four months of 2020, and following the collapse of the Thomas Cook Group, the company had priced competitively and increased market share with sales growth of 29 per cent.
In late February, with the spread of Covid-19 into the Canary Islands, the industry witnessed a dramatic fall in holiday booking volumes and airspace subsequently closed in mid-March.
The length of this airspace closure remains unknown and the board is of the view that the vast majority of bookings taken in the first half of the year will not travel as planned in the second.
On the Beach said the impact was currently expected to be around £35 million, but that this figure would likely rise.