Compass seeks £2bn in biggest fundraising since Covid-19 crisis began

Compass Group, the world’s biggest catering firm, intends to raise £2bn from investors to shore up its finances, as the schools, offices and sporting venues it previously supplied with food remain largely closed.

It is the biggest equity fundraising in the UK since the Covid-19 pandemic began. Retail investors can participate in the fundraising, which started on Tuesday morning, and buy shares through the PrimaryBid website and mobile app. Directors and senior managers intend to buy shares worth £1.1m in total.

Compass will use proceeds from the fundraising to pay down debt and strengthen its balance sheet.

The company’s revenues declined by a fifth in March and nearly halved in April, with about 50% of its operations shut because of the pandemic. It posted an operating profit of £854m for the six months to 31 March, down 10% from a year earlier.

As the firm withdrew its growth and margin outlook for 2020, its chief executive, Dominic Blakemore, said: “The Covid-19 pandemic has had a profound impact on Compass.”

Compass, which employs 600,000 people worldwide, has furloughed 70% of its staff in Europe using government job retention schemes.

The company has slashed monthly costs by £500m by scrapping its dividend, reducing capital spending and pausing acquisitions. Blakemore has taken a 30% pay cut, while the fees and salaries paid to the board and executive committee have been cut by 25%.

The firm also tapped the Bank of England’s Covid corporate financing facility, designed to help large businesses get through the crisis, for £600m.

As schools and offices have begun to reopen in some countries, Compass has overhauled its health and safety protocols including recommendations on PPE, hygiene and site layout.

It is simplifying its catering services by offering pre-packaged meals and contactless payment. It said working from home could create new product lines such as “take home tomorrow’s lunch” or home delivery.

Sports and leisure venues are likely to be the last sector to reopen. Compass, which supplies catering to stadiums in the UK and US, including Tottenham Hotspur and Chelsea football clubs, as well as the Wimbledon tennis championships, is planning for increased use of digital options in whichcustomers will pre-order, pre-pay, click and collect, and said it may deploy more staff to deliver food to the spectator’s seat.

Blakemore said: “It goes without saying that Covid-19 has changed everything. Compass is a resilient and adaptable organisation and we have moved quickly to manage cash and costs and increase liquidity.”

Read the original article at The Guardian