Auto Trader raises funds, cuts board pay in Covid-19 measures
By Sean Farrell
Date: Wednesday 01 Apr 2020
(Sharecast News) - Auto Trader announced a share placing equal to 5% of its share capital and reductions to directors' pay to strengthen its finances during the Covid-19 crisis.
The online vehicle marketplace said it was raising funds from shareholders to shore up its balance sheet and avoid constraints that might be required to meet debt covenants.
Auto Trader also said the extra capital would give it flexibility to take advantage of opportunities and to restart returning capital to shareholders as soon as possible. The company said its balance sheet was strong but that its debt to earnings ratio would increase because it is offering free services to customers during the crisis.
The FTSE 100 company will place up to 46,468,300 new shares with investors. It will announce the amount raised once the placing is completed. Its shares fell 4.1% to 421p at 08:07 BST.
Auto Trader also said its board would waive at least half of their pay for the foreseeable future and that executive directors had asked not to be paid bonuses for 2020. It has put a furlough programme in place for employees and will fully top up salaries for the large majority of those affected, the company said.
"The board believes that acting in this way is the clearest indication that we stand together with all our stakeholders, whether employees, customers, shareholders or suppliers," it said.
Auto Trader said it expected results for the year to the end of March to be broadly in line with market consensus though there may be provisions for events after the year end and items related exclusively to the Covid-19 crisis. No decision has been made on the 2020 final dividend but a payout is unlikely if current conditions persist, it said.
Nathan Coe, Auto Trader's chief executive, said: "We believe our actions to support our employees and customers, to reduce our costs and to strengthen our balance sheet will provide greater flexibility to act in the long-term interests of shareholders, employees, customers and other stakeholders."
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN