William Hill raises $281m for US investment in share capital issue boost
US revenue for six weeks to June 6 dropped 62% as firm faces ongoing Covid-19 impact
William Hill has raised $281m in a new ordinary share rights issue to provide the operator with a timely financial boost to strengthen its position in the US.
The FTSE 250 bookmaker last night confirmed the placement of ordinary shares totalling 20% of the total share capital of the business, approximately 174,854,257 shares.
Ordinary shares were placed at a price of 128p ($1.60) per share, representing a discount of 7.8% on the closing price on June 16.
William Hill revealed the completion of the ordinary shares portion of the capital issue on Wednesday, with 169,111,584 shares successfully placed by Barclays and Citigroup.
A secondary placement of ordinary shares in Hills was also completed, with 5,600,860 being sold to retail investors through investment brokers PrimaryBid.
The firm said proceeds from both sales will be used to strengthen its balance sheet and to provide “strategic and financial” flexibility in line with long-term growth ambitions.
“We believe that the placing will allow us to continue to execute on those ambitions, most noticeably in building on our leading position in the fast-growing US market. Importantly, it will also provide wider group resilience in the event of further economic and regulatory disruption,” Hills said in a statement.
In addition, directors and senior managers within the business have purchased 160,013 ordinary shares with a value of approximately £200,000.
In its latest trading update, William Hill revealed US revenue slumped by 62% in the six weeks up to June 9, despite an uptick in bets placed on alternative sports and the resumption of UFC and NASCAR in May.
Like-for-like retail revenue across the group dropped by 100% during the period as betting shops remained closed during Covid-19 lockdown measures.
Overall group revenue dropped by 50% during the six week period as a result of Covid-19.
Total online group revenue fell by 3%, following an 8% drop in UK online revenue but this was marginally offset by 7% growth in international online revenue during the period.
The international growth was attributed to the return of behind-closed-doors horseracing and the German Bundesliga.
Despite the expected drop-off, William Hill is confident that company-wide mitigation strategies have left the operator in a “stronger competitive position” as lockdown measures are eased.
“The return of sporting events has driven a strong recovery in our online volumes. Our UK Online business is in a better place than ever and our international business is displaying solid growth,” said CEO Ulrik Bengtsson.
“In the US we have used this period of lockdown wisely to move our product forward and we are now in a strong position to capitalise on the US growth opportunity that lies ahead,” he added.
In addition to the financial results, Hills has said it expects to receive a VAT refund from HMRC totalling £203m in the second half of 2020.
Peel Hunt analyst Ivor Jones reiterated his Buy rating for the operator. He said: We had been confident the group had the liquidity to trade through Covid-19.
“Now it has the resources to continue to invest in opportunities without always having one eye on its bank balance,” he added.