Auto Trader raises equity to tackle coronavirus crisis

Online marketplace announces new share sale

                                

UK online car marketplace Auto Trader is selling up to 46.5 million new shares, worth 5 per cent of its share capital, in an attempt to raise cash to strengthen its balance sheet during the coronavirus crisis.

“This equity raise will allow the group to resume its existing capital return policy at the earliest prudent opportunity,” the company said.

Auto Trader also announced cost saving measures and said its entire board has offered to give up at least half of their salaries and that it will grant leave of absence to its employees.

Prior to the UK lockdown, Auto Trader had allowed auto retailers to advertise their vehicles on its website free of charge throughout April, leading to a record number of cars shown on its platform.

The company expects to meet its covenant tests in March, but sees the September test showing an increase in net debt to core profit ratio due to the free services provided. It also expects to remain below the maximum covenant threshold in September.

It had drawn on £289 million ($356.94m, €327m) of its £400 million revolving credit facility at the end of February.

Auto Trader’s shares fell 4 per cent to 422.8p at the opening bell.

FURTHER READING: New cars in the UK emit more CO2 than older models

FURTHER READING: UK car sales expected to slump to eight-year low in 2020

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