Stobart raises £100m through placing after losses almost quadruple
Aviation to biomass energy group Stobart has raised £100m through a share placing after announcing an annual pre-tax loss of £158m.
The Carlisle-based group launched the placing last night, saying it was aiming to raise between £80m and £100m.
The announcement followed release of the group’s annual results for the year to February 29, which showed an increase in revenues of £170.175m compared with £146.889m.
However, last year’s pre-tax loss of £42.114m slumped to a £158m pre-tax loss for 2020.
The group said the loss is driven by non-cash transactions such as impairments of £101.9m, including a £45.1m write-down of the COnnect Airways loans that are deemed to have nil value following Flybe and Connect Airways entering administration post year end.
Infrastructure assets have been written down by £26.6m, and the group disposed of the Stobart and Eddie Stobart brands, driving a £19.9m impairment to align the year end value with the contractual consideration.
The group announced that it will withdraw from the rail and civils sector during the course of fiscal year 2021, explaining that the business was impacted by continuing costs on a legacy contract and is unlikely to generate an appropriate return for shareholders given the risks associated to it.
Stobart will also realise the value of all other non-core businesses or assets over the next three years.
During the year the group incurred new business and contract set-up costs of £9.3m in its aviation division, relating to route development at London Southend Airport.
In the energy division, delayed commissioning costs of £2.3m were incurred and £6.9m of costs relating to a significant unplanned shut down at one of the third-party biomass plants Stobart Energy is contracted to supply.
In the current financial year the group will focus on its aviation division.
At London Southend Airport it will specifically design and implement an improved passenger experience for post-COVID 19 travel, making use of significant unutilised space and technology to enhance passenger confidence, while providing a cost-efficient base of operation to airlines.
It also intends to realise value from the energy business as a maturing, cash generative and stable business.
Chief executive Warwick Brady said: “We are today announcing a clear plan to stabilise the business and provide a secure platform to move forward.
“We have a cost-efficient proposition for airlines and will further develop our passenger-focused airport experience that seeks to maintain passenger flow and provide enhanced customer confidence.
“Therefore, we will focus our investment and our business in this asset by seeking to dispose of our non-core businesses and, in due course, monetise Stobart Energy.
“The launch of the capital raise that we have announced will provide the group with the financial resilience necessary in the current environment and ultimately to position the business for success in the post COVID environment.”
The fundraise was via a firm placing and placing and open offer.
Stobart said it has been forced into the placing by the impact of the coronavirus pandemic.
It said it had started a process to gain new long-term debt to fund its growth investment programme and had explored the option of raising financing through the sale of a minority investment in London Southend Airport.
It was on track to enter into an enlarged debt facility ahead of the 2019/20 results, as well as being engaged in advanced discussions in relation to an investment in London Southend Airport.
But the negative impact from the COVID-19 pandemic on both Flybe and the wider group caused disruption to the process, removing the ability for the Group to secure this funding.
It said proceeds from the fundraise will be used for the repayment of certain amounts drawn under its revolving credit facility, to support the aviation and energy business and Stobart Air funding requirements.
It will also be used for selective investment such as airport infrastructure for a post COVID-19 world to establish a platform for “best customer experience”.
Stobart Group chairman, David Shearer, said: “We are delighted to have received support from both our existing shareholders and new investors for our equity issue, which will place the group on a sound financial footing going forwards.
“On behalf of the board, I would like to express my gratitude to those who have provided their support. We look forward to repaying their trust in us by delivering on our strategic objectives in the coming years.”