Whitbread launches £1 billion cash call

THE owner of Premier Inn hotels is asking shareholders to raise £1bn, just two years after making four times as much through the sale of Costa Coffee.

Whitbread sold the chain to Coca Cola in 2018 for £3.9bn and returned £2bn to shareholders after contributing to the pension fund.

Now the coronavirus crisis has forced Whitbread, which saw revenues plunge 97pc in the last seven weeks, to go back to its investors for more cash.

Whitbread yesterday said the rights issue would ‘return its balance sheet to a position of strength that will give it a real competitive advantage’ and ‘allow it to invest with confidence and flexibility’.

The business hopes to increase the number of rooms in the UK and Germany by 170,000 and boost its market share. But shares slumped by 13.4pc, or 382p, to 2461p.

The hospitality chain also confirmed it had furloughed 27,000 staff and was eligible for a loan of up to £600m from the Bank of England.

Several other firms including Boohoo and Compass have gone to the markets this month to raise additional equity, while the likes of M&S have asked lenders to relax their loan covenants. Whitbread also warned yesterday that British holidaymakers are unlikely to go on bucket-and-spade staycations until September. It is not expecting the Government to relax the rules for leisure travellers until well beyond July 4 – when hospitality businesses are scheduled to start opening. But it stressed it is ready to open whenever lockdown is lifted.

Whitbread chief executive Alison Brittain said: ‘I’m confident we’ll be open for business travellers, but less confident we’ll be open for leisure.’

Revenues rose 1.1pc to £2bn in the last year, and profit before tax rose 28.4pc to £280m.