HSS Hire is proposing to raise up to £54m gross by way of a firm placing and open offer. It has secured commitments for £43.5m from three of its major shareholders.
Earlier this month HSS announced the closure of more than half of its branches. It said that while revenues have returned to above 90% of 2019 levels, the Covid-19 pandemic continued to present a threat to finances. Without the capital raise, it risked breaching its covenants with lenders, it said. [See our previous report here.]
The company intends to use the net proceeds from the capital raise to: continue investment in the technology platform to strengthen the group's commercial proposition: continue investment in the hire fleet; and repay £15m of debt that falls due in January 2021.
The board is exploring alternative listing venues for the company, it said.
As at 27th June 2020, net debt (excluding the IFRS16 impact of £80.1m of additional lease liabilities) stood at £156.7m, a reduction of £22.8m from 28th December 2019.
Chairman Alan Peterson said: "This transaction is a major vote of confidence from three shareholders representing over 75% of the company's shares. It is testament to the significant strategic and operational progress HSS Hire has made since the start of 2018 as well as its resilience in challenging economic conditions. This capital injection will enable the group to further reduce its leverage – one of our foremost objectives – and gives us a strong platform from which to continue to implement change and drive growth."