WHSmith has unveiled plans to launch a £325m fundraise as the retailer doubles down on the expansion of its challenged travel division.
WHSmith expects to raise the funds through the issue of convertible bonds, with £50m earmarked to open approximately 100 new travel stores, 60 of which will be in North America.
Following the announcement overnight, WHSmith have today given more information about the fundraising offer. Delivery of the bonds is due to start on May 7, will be issued in tranches of £100,000 each and will be repayed in twin annual instalments until May 7, 2026.
The retailer has tapped up banks Barclays, J.P. Morgan Cazenove, BNP Paribas, Santander and HSBC to coordinate the fundraise, with Rothschild and Co acting as financial adviser.
It will use the remaining funds to partially pay down £400m in loans from its Marshall Retail Group and InMotion acquisitions.
WHSmith has also extended its rolling credit facility from £200m to £250m with an extended maturity from 2023 to 2025.
The business said these financing arrangements “will put the company in a strong financial position to capitalise on the significant opportunities that are expected to emerge in the travel retail market post-Covid.”
WHSmith’s decision to drive the expansion of its travel division follows Dixons Carphone confirming plans to shutter its travel business earlier today, which the electricals specialist said was “unsustainably loss-making”.
Alongside the fundraise, WHSmith reported a £19m pre-tax loss in the six months to February 28, 2021, compared with a pre-tax profit of £80m during the same period the previous year.
Overall revenue fell 44% during the period to £44m, driven by a 65% slump in sales across WHSmith’s travel division to £150m. The retailer’s high street arm registered a 14% sales decline to £270m.
Chief executive Carl Cowling said: “The group has adapted well to the evolving trading environment and we are in a strong position as our markets begin to recover.
“In travel, while many of our stores have remained closed, it is a credit to the team that we have kept up the momentum, focusing on our plan to increase average transaction value and spend per passenger while continuing to win new business. As a result, we are now operationally stronger than prior to the pandemic.
“We have a strong pipeline of new store openings with around 100 stores already won and due to open in travel over the next three years, the majority of these in North America. We are an important retail partner for our travel landlords and we are well-positioned to take advantage of further space opportunities that will arise over the coming months.
“In a difficult retail environment, our high street business has generated a resilient performance. At the same time, we are pleased that our online businesses, including Funkypigeon.com, have delivered a record performance.”
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