Safestyle sees shares jump as group raises £8.5m

The Bradford-based firm said the cash will strengthen its balance sheet so that the business is well capitalised and has a strong cash buffer to ensure it can continue trading.

A proposed conditional placing to raise £8.5m at a price of 17p per share was launched with institutional and other investors,including all of the directors.

Mike Gallacher, Safestyle's chief executive, said: “The strong support received from our shareholders, both existing and new, in the current challenging market is hugely welcome.

"I am also delighted that the board has also committed to contribute significantly to the placing, demonstrating all of ourdirectors’ strong belief in the growth strategy and potential of the group. The business has made strong progress in recent years and I believe that, as a result of the actions taken, we are well placed to weather the Covid-19 crisis and emerge to resume our recent positive momentum."

He said that together with existing funding arrangements, this equity fund raise will significantly strengthen the balance sheet, providing further headroom should it need to extend its temporary shutdown in line with Government guidance, protecting the NHS and saving lives.

"The business acted promptly in ceasing all operations on March 24 and I am grateful to our customers and staff who responded to this challenging situation and the disruption it has caused with such understanding and flexibility," said Mr Gallacher.

"In addition I would like to take the opportunity, on behalf of the board, to thank our shareholders, suppliers, banks, brokers and advisers for their strong support as we have worked together to protect the business and ensure that it emerges strongly when this crisis passes, as in due course it will.”

The firm’s banking covenants will be waived for up to six months, to apply for the entire shutdown period, and a reduced EBITDA covenant target will be in place for the rest of the year following resumption of trading.

Safestyle has warned the decision to temporarily halt normal activity could have a material impact on the group’s trading this year.

The placing was conducted by way of an accelerated bookbuild process. Zeus Capital and Liberum acted as joint bookrunners on the placing.