Shares in Saga almost doubled in value on Tuesday morning, after the company confirmed reports that its former boss was returning, and bringing a £100 million investment to boot.
The insurance and travel company rose 95% as markets opened, though the huge show of optimism soon subsided, leaving them up around 38%.
It comes after the company over the weekend said that former chief executive, chairman and owner Sir Roger De Haan would return to the businesses as non-executive chair.
He will also be pouring £100 million into the firm, in a bid to stabilise its finances, as part of a £150 million equity raise.
Around £60 million of Sir Roger’s investment will be invested in shares which he will buy at 27p each, a big increase on Friday’s closing price of 13.61.
Shares briefly reached 26.6p, before dropping back to around 19p on Tuesday.
Hargreaves Lansdown equity analyst William Ryder said that it was unsurprising that Saga needed extra cash.
“In some ways, it would be hard to design a company more susceptible to a pandemic than the group’s travel operations – and Saga didn’t start the year in the best of health either,” he said.
“The new money will dilute current shareholders, but we doubt there are too many long term investors left.
“The shares have fallen heavily over the last few years, and the pandemic only threatened to administer the coup de grace.”
In a statement, Saga said: “The board unanimously considers that the proposed equity raise will support the execution of its reinvigorated strategy under its strengthened management team, which it believes will return Saga to sustainable growth and lead to the restoration of significant shareholder value.
“Saga has continued to make good progress against the plan launched last year and has taken a series of actions in the last six months to protect the business from the significant disruption that has resulted from Covid-19, especially in relation to the group’s travel operations.”