Loungers raises £8.3m through placing to help survive protracted lockdown period

These new funds, the company says, will provide it with sufficient capital to survive in its entirety in the event of a protracted period of lockdown, and to recommence its growth strategy of 25 new sites per year at an appropriate time.

Since closing its 167 sites on 20 March, the group has taken several steps to reduce its cost base and minimise cashflow, subsequently cutting weekly costs by £480,000.

Loungers has furloughed 99% of its employees, retaining a skeleton staff to carry out statutory duties and prepare for reopening, and its directors have taken a salary reduction of 50% (20% reduction and 30% deferral until sites are reopened).

All capital expenditure and other non-discretionary spend has been paused, and the group is in negotiations with landlords in respect of waiving March quarter rent payments.

“Having continued to outperform our market immediately prior to lock-down, we are determined to emerge strongly from this period and rebuild that momentum,” says Nick Collins, CEO.

“With our newly agreed debt facilities and the successful equity fundraising, we are in a strong financial position with sufficient liquidity to come through this crisis and to take advantage of the opportunities that will emerge when restrictions are lifted.”

In the weeks leading up to the closure, loungers balance sheet remained strong with like-for-like sales up 2.5% (2 weeks ended 15 March 2020).