Leading British automotive marketplace AutoTrader.co.uk has launched a preemptive share issue to protect its balance sheet as it loses revenue from the ongoing Covid-19 crisis. AutoTrader said it hopes the measure will increase its market share and provide long-term benefits.
The company is projecting a significant loss of revenue in April, partially due to an announcement last week that it would allow dealers to advertise for free next month. This led to a record number of listings — in March 2019, the site had around 480,000 listings. At the end of March 2020, that number was up to 540,000 vehicles.
To strengthen its balance sheet, the company has issued 46.4 million new ordinary shares, around 5% of the current shares. AutoTrader said its balance sheet is strong but that the move will help it strengthen its liquidity.
The company also said it would halt share buybacks until its full-year results are published. The annual report was originally scheduled for early June, but was delayed. The company says it plans to announce “in due course.” AutoTrader’s financial year ended March 31 and it said that results will “be broadly in line with the market consensus” subject to provisions relating to the impact of Covid-19.
The company is also working to reduce personnel costs, including furloughing employees. Board members are foregoing at least half of their salaries or fees for the “foreseeable future,” and executive directors will waive their 2020 bonuses.
The company will also cut most discretionary costs, including marketing.
“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,” said chief executive Nathan Coe.
When it comes to the future, though, the company is hopeful. There “may be attractive opportunities to strengthen the business in the immediate aftermath of the current crisis,” AutoTrader said.