Auto Trader makes investor cash call as it slashes costs to weather coronavirus
Online car seller and trading platform Auto Trader has revealed plans for an investor cash call to bolster its balance sheet as it furloughs staff and slashes executive pay in the face of the coronavirus pandemic.
The company said it would launch a placing of up to 46.5 million new shares representing around 5% of its issued shares capital to strengthen its finances.
Auto Trader is also furloughing staff under the government scheme, which will pay them 80% of salary, but the firm said it plans to “fully top up salaries for the large majority of those who are impacted”.
Its board directors have also agreed to forgo at least half of their salaries or board fees for the “foreseeable future”, while executive bonuses will be waived this year.
But while the car industry has ground to a halt amid the outbreak, Auto Trader said it saw a record number of vehicles advertised on its site after announcing just before the UK lockdown that customers could list cars free of charge throughout April.
It said around 540,000 vehicles were displayed on its site at the end of March, up from 480,000 a year earlier.
The group expects results for the year to the end of March to be “broadly” in line with forecasts, but stressed that it cannot accurately provide guidance for 2020-21 due to the Covid-19 disruption.
Auto Trader chief executive Nathan Coe said: “We believe our actions to support our employees and customers, to reduce our costs and to strengthen our balance sheet will provide greater flexibility to act in the long-term interests of shareholders, employees, customers and other stakeholders.”
The firm has already axed most of its non-essential spending in areas such as marketing.
“We do not believe that pausing marketing spend at this time will make a material difference to our levels of consumer audience nor our long-term brand recognition,” it said.
Its half-year results in November showed a 12% rise in pre-tax profits to £127.7 million on revenues 6% higher at £186.7 million.