TheTimes8April2020

the times | Wednesday April 8 2020 2GM 35

Business

Asos has tapped its investors for more

than £200 million after a slump in

demand for party dresses and suits

from self-isolating shoppers knocked

its sales by a quarter in the past three

weeks.

After the stock market closed last

night, the online retailer confirmed

plans to place shares worth up to

18.8 per cent of the company. It is

understood that the placing was more

than four times oversubscribed.

Asos said that the fundraising, along-

side a new banking facility of between

£60 million and £80 million, would help

it to weather the crisis if there was no

improvement in trading for the next 18

months and would “enable the com-

pany to emerge in a stronger financial

position”.

After tumbling by 54 per cent since

the start of the year, shares in Asos

closed up yesterday by more than a

2019 Cavendish Square

That hope looks likely to

be dashed. Yesterday

Anglo American invit-

ed questions from

shareholders by email,

but said they would be

answered only after

its meeting on May 1,

long after proxies

hadn been lodged

and counted.

Some compa-

nies have yet to

indicate whether

they will give shareholders

any opportunity to hold man-

agement to account. Centrica,

owner of British Gas, has said

Hikma moved its

AGM from a hotel

in central London

to a house in

Surbiton while

Smith & Nephew

swapped

Cavendish

Square for a

common; angry

shareholders lose

the chance

to protest

2020 Sheethanger Common

uncommon AGMs

Cineworld has us on

edge of our seats

T

ypically, filmmakers got

there first. Contagion,

Outbreak, 28 Weeks Later: a

rash of pandemic movies

for those who can’t get

enough of the real thing. But how

do they help the likes of Cineworld,

the second biggest cinema operator

on the planet, with 787 picture

houses in ten countries?

Its cinemas are shut. And the last

thing Mooky Greidinger needs are

more people used to streaming

flicks at home. The Cineworld boss

was looking forward to full houses

for No Time to Die, the latest James

Bond extravaganza, now with an iffy

title. And, if not that, Black Widow,

Fast and Furious 9 or The New

Mutants — not a Covid-19 disaster

movie, apparently.

They’ve all been delayed. Worse,

just to keep his shareholders on the

edge of their seats, Mr Greidinger

has thrown two other things into the

coronavirus mix: a debt-laden

balance sheet and the $2.3 billion

purchase, in US dollars, of the

Toronto-listed Cineplex. The deal’s

yet to complete. But just the thought

of it has left investors feverish: not

helped by the auditor PWC raising

“going concern” issues at last month’s

full-year figures (report, page 40).

That lowered the shares 24 per

cent to 67p on the day, amid fears

the company could go bust. So it

says something for Mr Greidinger

that he’s calmed things down a bit,

despite his vague “Covid-19 update”.

News that Cineworld is in talks

over “liquidity requirements with

our revolving credit facility banks”

was taken as code that the lenders

of the $463 million loan would give

the group breathing space on its

5.5 times net debt-to-ebitda

covenant. There were the usual

corporate self-help measures,

including executive pay cuts and

suspending the fourth-quarter

dividend to save $58 million — plus

up to $220 million more from

canning 2020 payouts. And,

on top, the group said it continues

“to monitor progress” of the

Cineplex deal.

It was enough to send Cineworld

shares up 49 per cent to 59p, valuing

the group at £808 million. But it

hardly squares off the Cineplex

problem. As things stand, Mr

Greidinger is contractually obliged

to pay C$34 per share for a business

now trading at just over C$11: an

equity difference of C$1.45 billion

and a big hint the market thinks the

deal won’t happen. Worse, to buy the

business, Cineworld would be taking

on $2.2 billion of US dollar debt.

The Peel Hunt analyst Ivor Jones

is hardly alone in thinking that it

“would be in Cineworld’s best

interests” for the deal “not to go

ahead”. But Mr Greidinger is no

ordinary boss. His family built

Cineworld over three generations

from a 1929 cinema in Haifa,

Palestine, and still has a 21 per cent

stake. High-wire deals are a family

trademark. So first he plans to see if

his acquisition gets the nod from

Canadian regulators. And then try

to re-cut the terms, having been told

that Covid-19 is not enough to

trigger the deal’s “material adverse

event” clause. So things could get

messy legally. And, meantime, he’s

got to ride out the virus. Still, Mr

Greidinger wouldn’t be in the

movies business if he couldn’t

produce a cliffhanger ending.

The young ones

W

hat a time for the fake ID

merchants. Few teenagers

can get by without one of

those: the passport to gigs or clubs

for the underaged. Some,

apparently, even managed to rent

theirs out to lookalikes when they

weren’t using it, so creating a real

secondary market in something fake

— the sort of thing financial crisis

bankers might appreciate.

And, on the face of it, who’d need

one now? Yet could the virus see a

reversal in the usual trend: fake IDs

for people desperate to pretend

they’re younger than they are? It’s a

possible outcome from the

lockdown escape model proposed by

the University of Warwick and

Warwick Business School.

In the absence of a vaccine or

mass testing, they make “the case

for releasing those aged 20-30 that

do not live with older citizens”,

liberating 4.2 million young adults,

including 2.6 million in work. They

could “fulfil vital roles in the UK’s

transport and delivery network, or

open small businesses” — worth a

forecast £13 billion a year. No doubt,

they’d reopen pubs and clubs, too.

Yet the researchers highlight a

real cost: “an estimated 630 extra

premature deaths” among the

minority of youngsters susceptible

to coronavirus. And, if the gradual

liberation of older age groups was

the plan, how would you police it?

It would need constant passport or

ID checks. And wouldn’t people

cheat? Like most exit strategies, it

has its flaws.

Soap opera

C

oronavirus has killed most

M&A. But in these markets

few deals are trickier to price

than this: Air Liquide selling its

hand sanitiser business Schülke.

Who knows if this is peak demand

or whether Covid-19 will produce a

world of hygiene-crazed folk never

without a bucket of sanitiser.

Anyway, the private equity outfit

EQT Partners is the preferred

bidder. It’s in talks over a deal worth

about €900 million for an outfit with

annual sales of €335 million and

€70 million-odd ebitda. Tough if

people find soap’s just as good.

The great outdoors

A

GMs will never be the same

again. After Hikma Pharma’s

husband and wife bash from a

house in Surbiton, Smith & Nephew

opted for an outdoor event at

Sheethanger Common, Hemel

Hempstead. It’ll star the company

secretary in her “orange S&N T-

shirt” and her shareholder hubby,

freeloading on the available

refreshments: a cinnamon bun.

Forget the QE2 conference centre.

Once we’re over the virus, investors

will demand picnics in Hyde Park.

[email protected]

business commentary Alistair Osborne

Investors join party in Asos fundraising

third, or 395½p, at £15.59½. The placing

was not open to individual investors,

who have been fans of the retailer since

it was floated in 2001.

Asos revealed that its group sales had

fallen by between 20 per cent and 25 per

cent in the last three weeks — although

this is far less than the declines suffered

by traditional high street retailers that

have had to shut stores.

Alongside the placing, Asos brought

forward its interim results, reporting a

21 per cent surge in sales to £1.6 billion

for the six months to the end of

February. Pre-tax profit also increased

sixfold from £4 million to a record

£30.1 million.

Asos’s move to raise cash comes after

analysts at Liberum warned that the

company had only “four months’ worth

of liquidity left”. However, Nick Beight-

on, 50, the retailer’s chief executive, dis-

missed the analysis and said that the

company’s scenario planning had

shown that it had enough liquidity for

18 months even if sales continued to fall

by 25 per cent.

He said that the possibility of all its

operations closing and of the company

having zero income was “remote”

because its warehouses in Berlin,

Barnsley and Atlanta were under dif-

ferent jurisdictions. There had been

concerns that Asos would have to

follow Next and shut its British ware-

house, after complaints by GMB, the

union, but the online retailer said that it

had put in place social distancing

measures and had been cleared by

authorities to continue trading safely.

Mr Beighton said that Asos was

offering heavy discounts on suits and

party wear and had cancelled orders

with suppliers, but was honouring pay-

ments to them for stock that was

already on its way.

He also said that he was donating

20 per cent of his salary to local chari-

ties in response to the Covid-19 crisis.

He was paid £769,921 last year.

Ashley Armstrong Retail Editor

only: “The format

of the AGM this

year will be purely

functional to

comply with legal

requirements.” It

promises further

details in due

course.

Other compa-

nies have gone

further, stating

that shareholders

will be given the

chance to ask writ-

ten questions. But

the devil will be in

the detail in how they

are chosen and answered. Some share-

holders fear that awkward questions,

for example on executive pay, will be

ignored and that companies will

cherry-pick the easy questions —

something much harder to do in a live

meeting when a curious shareholder

has the microphone to hand.

Bunzl, the office supplies group, has

given itself plenty of scope to ignore

difficult questions, announcing in its

AGM statement that “responses will be

given as soon as reasonably practicable

to those questions reasonably consid-

ered to be appropriate and relevant”.

Barclays, too, is giving itself wriggle

room, saying that it will reply to all

questions but will publish answers only

to “frequently asked questions” and

“where appropriate”.

Whatever form the questions take,

underperforming boards will be spared

the normal pummellings. The angry

shareholder revolts that build up steam

over the course of an hour or two in an

auditorium just aren’t possible when

everything is done in writing.

That will please boards that don’t

relish being held to account, share-

holders say.

The Financial Reporting Council

said last month that “companies need

to manage the risks presented by the

spread of coronavirus transparently

whilst ensuring shareholders continue

to have the maximum opportunity to

have their say”.

Smith & Nephew has addressed this

issue by promising an audiocast

meeting with registered shareholders

immediately after the AGM. Standard

Chartered has promised a retail

shareholder call later in the year, when

questions can be put to its board. Royal

Dutch Shell already holds supplemen-

tary meetings for private shareholders.

These can be useful because they strip

out the formality of AGMs and are

much more relaxed and informative,

Ms Graham said.

In the long run, the shutdown is likely

to give listed companies a nudge

towards virtual meetings, but that will

be resisted by many. When in 2018

Serco, the outsourcing group, proposed

powers to allow it to do away with

physical AGMs, it met fierce resistance

from institutions and shareholders.

Sacha Sadan, head of governance at

Legal & General, said at the time: “How

would we know in a virtual AGM that

awkward questions weren’t being

vetted and filtered out?”

Stripped-down AGMs this summer

are likely to reawaken those suspicions.

ALAMY; ANDREW MCCOY/GETTY IMAGES

2020 Surbiton