City Pub Group has announced a placing and open offer to raise new equity of £22 million.

Launched through an accelerated bookbuild process, it is hoped the placing will raise up to £15 million, on top of the predicted £7 million raised by an open offer at a price of 50 pence per share.

Due to the impact of the coronavirus, like for like sales have dropped considerably for the group. For the first 11 weeks to 15 March 2020, like for like sales were down 4.5%.

Earlier this week, the company announced a series of measures that it was taking to reduce its monthly costs including temporary and permanent reductions in the number of employees, a 50% reduction in the salary of directors and a suspension of variable costs like BT, Sky and entertainment facilities.

It will also be pursing the Government’s Jobs Retention scheme 80% subsidy, and is in talks with both landlords and suppliers in an effort to achieve rent holidays and extend credit terms respectively.

The company estimates that the monthly cash requirement, including retained employee costs and no deferral in rent, will be approximately £350,000 per month, and is therefore proposing to raise funds via a placing and open offer to strengthen its balance sheet and enable it to plan ahead for when normal business returns.

The issue price of 50 pence per share represents a discount of 10.7% to the closing mid-market price of the Company’s existing ordinary shares.