MARKET REPORT: Second round of funding to prop up Wetherspoons

Pub group Wetherspoons has gone cap-in-hand to investors for the second time since the pandemic began as it attempts to keep its head above water.

It is hoping to raise between £92.1million and £93.7million to see it through the rest of the year, by selling up to 8.4m shares.

This would mean offloading them for around 1100p, higher than the 900p which investors paid when Wetherspoons raised £137million at the start of the pandemic. 

Cash call: Pub group Wetherspoons is hoping to raise between £92.1m and £93.7m to see it through the rest of the year, by selling up to 8.4m shares

Some of the money could be used to buy more pubs, which are likely to be going cheap due to the devastation of the hospitality sector.

Snapping up pubs during downturns is a game it has played before. But it could be risky, given the current uncertainty.

Wetherspoons itself admitted that if it doesn’t get the latest Government-backed loan it has applied for, and is unsuccessful in raising money, it may only have enough cash to last until the end of the year. 

Its sales slumped 27.6 per cent over the 15 weeks to November 8, and since the start of the year all of its near-900 pubs have been closed.

Stock Watch – Cambridge Cognition 

The pandemic has had a mixed impact on Cambridge Cognition, which develops digital tools to assess brain health. 

While some clinical trials were suspended, the pandemic provided impetus for a shift to evaluating virtual clinical trials, boosting demand for some products.

In 2020, order intake was up 158 per cent at £12.7million, with a backlog of another £11.2million.

The firm’s loss for the year has narrowed from £2.9million to £0.4million. Shares jumped 17 per cent, or 11.5p, to 79p.

The chain has borrowed £48.3million under emergency loan schemes, applied for another £51.7million, furloughed 37,000 staff and dismissed another 6,000.

Shares climbed 4.1 per cent, or 47p, to 1183p, making it one of the largest risers on the FTSE 250, which ended the day down 0.18 per cent, or 36.45 points, at 20,602.89.

Shares in Mike Ashley’s Frasers Group could rise today, after it announced after the market closed that it had ramped up its stake in Hugo Boss.

Frasers’ maximum interest in Hugo Boss, through a variety of financial instruments, is now worth £245million – up from £97million last summer. Shares in Frasers were down 1.4 per cent, or 6p, to 435p, before the announcement was made.

Mr Kipling owner Premier Foods acted as a drag on the mid-cap index, despite an ‘exceptional quarter of trading’ in the 13 weeks to Boxing Day.

The firm, which also owns Bisto gravy and Paxo stuffing, said sales were up 12.5 per cent over the first nine months of its financial year, and that would be boosted even further as it ramped up marketing over the next three months.

Chief executive Alex Whitehouse said: ‘Looking to the remainder of the year, out-of-home eating is likely to remain heavily restricted and we therefore expect to see continued high levels of consumer demand.’

But caution around what might happen when lockdown ends, and perhaps some profit-taking, saw shares slip 4.8 per cent, or 5.2p, to 102.8p.

Online electrical retailer AO World, which sells items from fridges to radios, fell victim to a similar trend as it slipped 4.2 per cent, or 16p, to 361.5p.

Demand, boosted by the pandemic, stayed strong in the final three months of 2020. Costs had been ‘significantly higher’ as it tried to stay Covid-compliant.

Chief executive John Roberts said: ‘I believe we’ve seen ten years of change in ten months.’

The FTSE 100 edged down 0.11 per cent, or 7.7 points, to 6712.95.

But among the small-cap companies, construction company Kier was a stand-out performer.

The outsourcer, which has been battling through a turnaround as it struggled to get its debt down, has won an eight-year maintenance contract worth around £200million with Transport for London, and should have cut costs by around £105million by the end of its financial year in June. Shares jumped 9.7 per cent, or 7.25p, to 82.35p.

Sales at Hotel Chocolat were up 19 per cent as online sales more than made up for store closures. Shares in the chocolatier hovered up 0.7 per cent, or 2.5p, at 372.5p.

This post first appeared on Dailymail.co.uk