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.
Giles Thorne, equity analyst at Jefferies, said: "We're convinced that Auto Trader is cannily using its balance sheet and profitability to signal to its customers that 'we are all in this together'.
"This then kills two birds with one stone: it supports customers during a period of crisis - and we expect the April fee deferral to extend into May - while simultaneously closing any headroom for competition to exploit Auto Trader's dominance."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here