TheTimes8April2020

40 1GM Wednesday April 8 2020 | the times

Business

Cineworld has halted dividend

payments and is holding talks with its

banks as Britain’s biggest cinema chain

scrambles to bolster its finances.

All of its 787 cinemas in ten countries

have been closed because of the

coronavirus crisis in a move that

FTSE 250 business said yesterday had

been “impossible to imagine a few

months ago.

“Every effort is being made to miti-

gate the effect of the closures, to assist

our employees and to preserve cash.

These efforts include discussions with

our landlords, the film studios and

major suppliers, as well as curtailing all

currently unnecessary capital expendi-

ture.”

Cineworld was established 25 years

ago and was listed on the London Stock

Exchange in 2007. It became the second

Garnier is

turning its

hand to

sanitiser

Ashley Armstrong

The release of the new James Bond movie No Time to Die has been delayed to November as cinemas worldwide are closed by the coronavirus pandemic

MLADEN ANTONOV/AFP/GETTY IMAGES

Shareholders have backed WH Smith’s

efforts to shore up its balance sheet with

£165 million of fresh cash while the

majority of its lucrative airport and

railway station shops are closed.

WH Smith yesterday raised more

than the £150 million originally indi-

cated by selling 15.7 million new shares

at £10.50, a 4 per cent discount to the

previous day’s closing price.

The company’s shares, which usually

offer a reliable dividend, have crumpled

by almost 60 per cent since the start of

the year as coronavirus has decimated

its travel shop business. However, they

edged up by 2p, or 0.5 per cent, to £10.96

last night.

The group’s sales have fallen by

85 per cent in the past week and it

expects a monthly decline of £114 mil-

lion, reducing operating profits by

Private equity gives Airbnb

room to sit out lockdown

James Dean US Business Editor

Airbnb has received a $1 billion private

equity cash injection as it struggles with

deepening losses.

The home-sharing service raised the

money from Silver Lake and Sixth

Street Partners, the American firms, in

part to support its global network of

“hosts” amid a dearth of bookings.

Airbnb is one of Silicon Valley’s most

vaunted internet start-ups and was

valued at up to $31 billion last year. The

company, founded in 2008, is an online

platform that allows millions of home-

owners to list spare rooms or properties

for short-term lets, making money by

taking a cut of the rental income.

The $1 billion funding, announced on

Monday night, is a combination of debt

and equity. The parties did not disclose

the terms of the agreement.

Brian Chesky, 38, chief executive,

said that the company would use the

funds to invest in its hosts, offer long-

term stays for students and people on

extended work assignments and to

support its new “experiences” business,

where hosts offer activities such as

surfing trips and art tours.

Airbnb was destined to go public this

year, but the coronavirus pandemic has

effectively switched off its only source

of income. The company was already

heavily loss-making before the virus

struck: in the fourth quarter of last year

Airbnb lost $276.4 million excluding

interest, taxes and other charges. In the

same period a year before, it lost

$143.7 million.

WH Smith insures against travel losses

£39 million. The retailer said that it had

pursued the placing because its “pessi-

mistic scenario” was that 95 per cent of

its stores would remain closed during

the pandemic.

Analysts at Peel Hunt. the broker,

said that the company was being “ex-

tremely cautious” and that it now had

“masses of headroom... even a lengthy

crisis would not mean that WH Smith

was fundamentally troubled cash-

wise”.

WH Smith has followed the example

of Hays, the recruitment group, which

raised £200 million last week at a 13 per

cent discount, and Autotrader, the car

adverts company, which raised

£186 million, at a 9 per cent discount.

WH Smith traces its roots to 1792. Its

first travel outlet, at Euston railway

station in London, was opened in 1848.

In recent years it has focused on its

travel business, which accounts for

almost three quarters of its profit.

WH Smith has 600 high street shops

and 867 outlets in stations and airports.

About 70 per cent of WH Smith’s

shops are closed, but 140 stores in Brit-

ain’s hospitals remain open, along with

203 high street stores that also have

post offices.

The retailer has secured a new

£120 million loan facility that Carl

Cowling, 46, its chief executive, said

would give it a “strong position to navi-

gate through this time of uncertainty”.

It is scrapping its dividend and is

using the government’s job retention

scheme to furlough staff.

Ashley Armstrong Retail Editor

£165m

The funding raised by WH Smith

Cinema giant seeks clearer picture

over its finances in banking talks

Ben Martin Senior City Correspondent biggest multiplex chain in the world
after it bought Regal Entertainment, an
American rival, for $3.6 billion in 2018.
It is in the midst of expanding still
further with the C$2.8 billion (£1.6 bil-
lion) acquisition of Cineplex, of Cana-
da.
The company is run by the brothers
Mooky and Israel Greidinger, its chief
executive and his deputy, respectively.
It said yesterday that its executive
directors would “defer” their salaries
and any bonuses “until there is greater
clarity on the prevailing circumstances
and given the impact of Covid-19 on
many of our employees”. Its non-exec-
utives will defer fees. The move comes
after Cineworld last month reversed its
decision to make staff redundant,
opting instead to make use of the gov-
ernment’s furlough scheme. It had
faced criticism about the job losses.
The business said yesterday that it

was discussing its “ongoing liquidity

requirements” with the banks behind

its $462.5 million credit facility. As of

the end of last year, it had drawn

$95 million, or about 20 per cent. If it

exceeds 35 per cent, its banking

covenants come into play under the

company’s pre-Cineplex deal debt

structure, according to analysts at

Goldman Sachs, which is Cineworld’s

corporate broker. However, those cove-

nants could change as a result of Cine-

world’s talks with its banks.

The company also suspended the

4.25 cents-a-share dividend it had de-

clared for the fourth quarter of 2019,

which will preserve $58 million in cash,

as well as future payments for 2020.

Investors cheered the efforts to shore

up the chain’s finances and Cineworld

shares, which have tumbled in recent

weeks, closed up by 19½p, or 49 per cent,

at 59p last night. However, questions

remain over the Cineplex deal. Cine-

world said yesterday that it continued

to “monitor progress” of the takeover.

Canadian regulatory clearance of the

deal has been delayed by the pandemic.

Ivor Jones, an analyst at Peel Hunt,

the stockbroker, said: “It would be

in Cineworld’s best interests for

this not to go ahead.”

Cineworld can walk away if

Cineplex’s debt does not stay

below C$725 million. Its borrow-

ings stood at C$625 million at the

end of 2019.

The Covid-19 outbreak has

thrown the cinema world into

turmoil. Theatres have been

shut as social distancing

measures are put in force, re-

leases such as the new James

Bond film have been delayed

and production on forthcoming

projects has been disrupted.

Garnier is to stop the production of a

popular make-up remover as the

cosmetics company switches to making

hand gel instead.

Last month people rushed to stock-

pile hand gel after health authorities

said that sanitiser products that had

more than 60 per cent alcohol were

effective in killing coronavirus.

Industry figures recorded a 225 per

cent rise in hand gel sales, but stocks

swiftly ran out, leading to some

products being sold at hugely inflated

prices on online marketplaces such as

Amazon and eBay.

Garnier said that it would halt

production of its bestselling Micellar

Water, below, which usually sells one

bottle every five seconds in Britain, in

order to produce hydro-alcoholic hand

gel. Micellar Water, below, is made up of

micelles, tiny balls of cleansing oil

molecules, suspended in soft water that

attract dirt and help to remove make-

up. The Garnier product had become

even more popular after featuring

heavily in the daily beauty regime of

female Love Island contestants.

The company said that 300,000

bottles of the new hand gel would be

given free to essential retail staff, in-

cluding at supermarkets and pharmacy

chains. Another four million bottles

will be sold in shops. The bottles of the

Garnier-branded hand gel will be

priced at £2.49 for 125ml.

“In this unprecedented crisis, it is our

responsibility to contribute to the

collective effort in every way possible,”

Jean-Paul Agon, 63, chairman and

chief executive of L’Oréal, the parent

company, said.

Last month L’Oréal said that it

would shift production across

Europe in order to manufac-

ture more hand gel. It is also

freezing all debts owed by

small businesses. LVMH, the

luxury goods group, has

switched to making

hand gel for hos-

pitals in France.

Bottles with

Christian Di-

or logos have

since been

repurposed

for the hand

gel for medi-

cal staff.