LONDON (ShareCast) - (Sharecast News) - Fishing tackle retailer Angling Direct said on Thursday that it plans to raise around £5.5m in a placing to strengthen its balance sheet and ensure it can pay suppliers promptly ahead of an expected increase in demand over the next few weeks.
The AIM-listed company will place shares at no less than 50p each, with the placing conducted in two tranches. The price represents a 15.3% discount to the closing mid-market price of 59p on Wednesday.

With stores due to reopen from 15 June, the group said a "significant" chunk of the proceeds will be used to strengthen the balance sheet to "provide a buffer against the uncertainty created by Covid-19".

Some of the proceeds will also be used to provide additional funding so it can pay its suppliers on time.

"As lockdown restrictions are eased over the coming weeks, the directors expect high levels of activity across the group's sales channels and therefore believe that it will be important to ensure stock is maintained at sufficient levels to satisfy customer demand," it said.

If there are any surplus funds available and should there be a time when the Covid situation becomes more stable, these could be used to capitalise on "various opportunities" in the company's markets and accelerate growth.

Angling Direct said that under its base case scenario, physical stores will make a phased return to normalised levels of activity following reopening.

"In such circumstances, the board believes that based on its analysis of forecast cash flows the group would have sufficient levels of working capital headroom, both before and after the receipt of the proceeds."

At 1050 BST, the shares were down 13.2% at 1.24p.

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