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Johnson Service to raise £85m in placing to weather Covid disruption

By Michele Maatouk

Date: Friday 29 May 2020

Johnson Service to raise £85m in placing to weather Covid disruption

(Sharecast News) - Textile services provider Johnson Service Group said on Friday that it plans to raise around £85m in a placing to improve its liquidity position and strengthen its balance sheet amid disruption from the Covid-19 pandemic.
The AIM-listed company will place just over 73.9m shares at 115p each through an accelerated bookbuilding process. This is a 19.6% discount to the closing share price on Thursday.

Johnson said proceeds will be used to provide sufficient liquidity to deal with a prolonged lockdown period and lower revenue and new sales post lockdown.

They will also enhance the balance sheet "to allow for ongoing investment in the business to continue to drive organic growth and the ability to quickly act on non-organic opportunities to grow the business in the aftermath of the pandemic".

News of the placing came alongside a trading update, in which the company said trading for the first two months of the year before the impact of Covid-19 was in line with its expectations but it continues to see "a significant amount of disruption across its markets".

"The full implications of Covid-19 on the group's financial performance and position are difficult to determine at this stage," it said. "The group has modelled a range of potential scenarios regarding how the business might trade during lockdown and how performance is expected to develop once lockdown has been lifted.

"Our core scenario assumes that the market slowly begins to recover from July 2020, in-line with government indications. The group would then begin to recover from its current levels, with modest initial revenue assumptions which increase gradually during FY20 and FY21. The benefit of the government's Coronavirus Job Retention Scheme is only included in the scenario planning until the end of June 2020."



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