HLO confirms 125 closures
ABOUT 5% of Helloworld’s 2,500 members across Australia and New Zealand have elected to close due to the COVID-19 pandemic, according to an update from the company this morning.
That equates to 125 outlets, with HLO saying its $50 million capital raising (TD breaking news) will enable it to weather a prolonged period of disruption to the global travel industry.
The company expects its TTV to remain at 10-12% of previous levels until at least Sep 2020 and then progressively increase as state borders and potential transTasman travel bubbles open.
“The company is already seeing an increase in domestic air and land bookings, aligned to planned capacity increases by the domestic carriers,” an ASX update this morning noted.
Moreover, Helloworld’s corporate business, which comprises 70% of its domestic TTV, is “increasing week by week as border restrictions have eased”.
Once the fully underwritten equity raising - being conducted at $1.65 per share, a 16% discount to HLO’s closing price yesterday - is completed, the company will have “sufficient liquidity for operating and capital expenditure through to the end of 2022, assuming ongoing disruption,” it said.
As well as a share placement to institutions managed by Ord Minett, existing investors will be able to participate in a 1-for-9 accelerated pro rata non renounceable entitlement offer.
CEO Andrew Burnes and Executive Director Cinzia Burnes, say they will take up 70% of their joint entitlement, subscribing for $5 million in new shares.
In terms of other major shareholders in HLO, Qantas has advised it will not participate in the offer, while the Alysandratos family has “indicated they will consider their participation upon receipt of the offer documentation”.
Although it does not anticipate TTV returning to 2019 levels for four years, Helloworld “believes that it is well placed to capitalise on the disruption to the global travel industry by identifying, and having the financial flexibility, to continue to gain market share and drive sustainable cost efficiencies”.
In particular, opportunities highlighted included the possibility of boosting its share of the bricks and mortar travel space “given planned reductions by competitors,” as well as by focusing on domestic tourism opportunities.
Helloworld forecasts high demand for travel agency services for both leisure and corporate due to new complexities in international travel, more desire for family travel after extended lockdowns, the recovery of cruise travel with enhanced protocols, and the “possible requirement for travellers to have arrangements fully confirmed and recorded prior to departure”.