Law360 (May 21, 2020, 6:45 PM EDT) -- Whitbread Plc, the United Kingdom's largest hospitality company, announced plans Thursday to ask its investors for more than £1 billion ($1.2 billion) to support the restaurant and hotel owner through the coronavirus pandemic.
Whitbread said it would issue a little more than 67.3 million new shares of common stock for 1,500 pence (about $18) each. That represents a 47% discount from the stock's closing price Wednesday of 2,843 pence each.
The Dunstable, England-based hospitality business, which owns brands like Premier Inn and Beefeater, outlined the dismal effects the virus and mass lockdowns have had on its finances in a rights issue Thursday announcing the share sale. Whitbread said it has spent £80 million per month to run its hotels and restaurants since the financial year started, even as the coronavirus has caused its establishments to close their doors to customers.
Whitbread said that more than 95% of the group's 821 hotels in the U.K. and Ireland as well as all of its restaurants have been closed since the end of March. Its German hotels, which closed in March, reopened in May, and its hotels in the Middle East have remained open but have seen significantly fewer reservations, the company said.
The group also noted that it has spent £100 million to refund customers for cancellations.
Despite Whitbread's admission that revenue has decreased nearly to zero since late March, the group said it will likely have to spend £130 million during the financial year ending in 2021 for the required maintenance of buildings.
Whitbread said that selling additional shares was the best way to raise capital without increasing the company's debt.
J.P. Morgan Chase & Co. and Morgan Stanley are underwriting the deal.
The company said that in addition to the share sale, it plans to increase the number of rooms in its existing U.K. hotels and expand in the German market to make up for the lost money. Whitbread also previously announced that it won't be distributing any money to shareholders until its revenue improves.
Before the pandemic, Whitbread's year started off on a high note when it began construction in January on a £151 million, 400-bedroom hotel that will be the largest Premier Inn in the Greater London area, according to the company's website. And earlier this month, the hotel and restaurant owner's proposals for a new Premier Inn in the English town of Milton Keynes, about 50 miles northwest of London, were approved.
Whitbread's general counsel Chris Vaughan oversaw the share sale announcement.
Representatives for J.P. Morgan and Whitbread declined to comment beyond the press release.
Morgan Stanley did not immediately reply to a request for comment.
--Editing by Alanna Weissman.
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