- Helloworld Travel (HLO) has launched a $50 million equity raise to increase liquidity as the company rides out the coronavirus travel shutdown
- The equity will be raised via a $27.1 million placement and a $22.9 million entitlement offer
- The online travel agent has also implemented cost-cutting measures, by reducing operating costs, closing overseas offices and divesting its U.S. wholesale operation
- Helloworld said these measures, combined with the equity raise, will give the company enough cash to continue operating until late 2022
- It’s hoped travel restrictions will be lifted in Australia by late 2020 to mid-2021
- Helloworld shares are in a trading halt, but last traded for $1.97
Online travel agent Helloworld Travel (HLO) is aiming to raise $50 million in equity to help the company ride out coronavirus-related travel bans.
Helloworld wants to increase its liquidity to $187.1 million in order to keep the company operating until late 2022, in case these current conditions continue.
However, it’s hoped travel bans will be lifted in Australia later this year, or by mid-2021, allowing the company to operate again.
Reducing costs
The online travel agent has already implemented cost-cutting measures, including reducing operating costs down from $23 million a month to $2 million.
It also shut two of its overseas offices in Manila and Mumbai and divested its U.S. wholesale operation.
It also suspended all marketing and franchise fees for its branches across Australia and New Zealand.
So far, Helloworld said five per cent of its franchises have decided to shut.
Equity raise
Helloworld will raise equity through a fully underwritten placement to institutional investors and a one-for-nine accelerated pro-rata non-renounceable entitlement offer.
Under the terms of the $27.1 million placement, investors will be offered new shares in the company at a discounted price of $1.65 per share.
Meanwhile, the $22.9 million entitlement offer consists of both an institutional entitlement offer to raise $17.5 million and a retail entitlement offer to raise $5.4 million.
Eligible shareholders can buy one new share for every nine they hold as of 20 July, with the new shares also priced at $1.65 each.
Ord Minnett has fully underwritten both offers, and an estimated 30.3 million shares will be issued under the deals, representing around 24.3 per cent of existing shares on issue.
In the meantime, Helloworld’s shares will remain in a trading halt until the equity raise is completed.
Shares in the company last traded for $1.97 on July 15.