SSP seeks £475m in equity raising to boost balance sheet

Upper Crust owner SSP said it was looking to raise £475m via a rights issue as it anticipated slower recovery from the impact of the Covid-19 pandemic on the travel industry.

The company said it expects a near full return of passenger numbers to pre Covid levels by financial year 2024 “led by a rebound in domestic and leisure short-haul air and rail travel”.

No issue price was revealed, but the raising will proceed on a 12-for-25 basis.

SSP added that it had secured an extension to bank facilities that were previously due to expire in July to January 2024, conditional on completion of the equity raising.

"The Board is confident in the medium term outlook for the group's end markets, but the profile of the recovery remains uncertain," SSP said.

It added that notwithstanding the rapid approval and global roll-out of vaccination programmes, new variants of the virus, vaccine supply constraints and various lockdown and travel restrictions "mean that the pace of the recovery in 2021 has been delayed relative to the group's expectations towards the end of 2020".

"The impact of the pandemic on working practices may have a longer term impact on both business travel in air and commuter travel in rail," the company said, as its trading conditions did not improve in the first and second quarters of fiscal 2021.

SSP, which operates branded food outlets in airports and train stations, has been hammered by travel restrictions imposed to stymie the spread of the coronavirus, effectively halting commuter travel and holidays. The company last year raised £216m as the economy entered the crisis.

“A lot of people are desperate to get back on a plane for a week in the sun and others want to get on a train see friends and family. However, much uncertainty remains over when travel restrictions will be lifted in the various countries in which SSP operates. Then there is the question as to whether a many people will feel confident mixing in crowded spaces so soon after the crisis," said AJ Bell investment director Russ Mould.

“Assuming wings get back in the sky and wheels start to turn again later this year, SSP would then have some money left over from the fundraise to invest for its future."

“At some point we’ll all be buying a croissant and a coffee while waiting to go on a journey; and it’s almost certainly a ‘when’ not ‘if’. SSP just cannot have full confidence in when that will be.”