HSS seeks £54m cash injection
26 October 2020
HSS proposes to raise up to £54m gross by way of a firm placing and open offer.
It has secured commitments from three of its major shareholders to subscribe approximately £43.5m for company shares as part of the capital raise.
When HSS announced its interim results on 8 October, it stated that, while revenues had returned to above 90% of 2019 levels, owing to the pandemic it had implemented measures to reduce costs and preserve liquidity. These included the closure of 134 of its 240 depots and the loss of 12% of the workforce, amounting to around 300 jobs. It posted a loss of £12.9m in the first half of the year.
The business says that, without the cash injection, it could risk breaching debt covenants. It intends to use the net proceeds to repay £15m of debt that falls due in January 2021.
The new shares will be issued at 10 pence each; last Friday's closing price was 22.40p.
In his report accompanying the interim results earlier this month, chief executive officer Steve Ashmore said that the Covid-19 period had “given us the opportunity to accelerate our strategic plans set out in 2018,” including moves to “transform” HSS’ Tool Hire business.
The company says that a key element in this approach is ‘Brenda’. Launched in April 2019 as an augmented OneCall platform, it is designed to help source equipment from rehire suppliers and “significantly shortens the customer journey and provides superior visibility of the rehire process for customers, suppliers and colleagues alike.”
HSS says that this approach enables the group to “transform its operating model and remove significant fixed costs associated with its branch network whilst maintaining a national presence.” Since March 2020 the company reports a 33% increase in online users and a significant shift in orders being placed through digital channels.
The HSS Board says it is also exploring alternative listing venues for the company, as its three major shareholders own around 78% of its issued share capital.
• The scale of the current HSS operation is a far cry from the heady days of 2005, when it was the undisputed industry leader. Back then it encompassed 429 separately managed and staffed profit centres in the UK and Ireland, with 306 Hire Shops and the remainder within its specialist operations Lift & Shift, Safe & Sure, Hire Weld and Event Hire.
