Analysts are predicting an avalanche of capital raisings in coming weeks as companies look to shareholders to support them through the coronavirus-induced economic downturn.
Already we have seen some $2.5 billion in capital raised since the downturn took hold, as companies seek to shore up near-term liquidity.
More than 50 ASX shares have cut guidance and cancelled or postponed dividend payments since the coronavirus downturn took hold. Now, a conga line of companies are coming cap in hand to equity markets for near-term funding.
ASX media share the latest to seek shareholder help
Southern Cross Media Group Ltd (ASX: SXL) is the latest ASX share to tap equity markets in an effort to survive the coronavirus downturn. This morning, the radio broadcaster announced a $169 million equity raising which will be used to reduce debt and enhance liquidity.
The company also cancelled its interim dividend, resulting in a saving of $21 million, and announced no final FY20 dividend will be paid. The Board further expects no dividends to be paid in FY21.
Pay cuts of 10% have been mandated for employees earning over $68,000 per year and bonuses cancelled which is expected to save $20 – $23 million this calendar year.
Coronavirus capital raisings
Southern Cross joins a host of ASX shares undertaking emergency equity raisings, with The Australian reporting coronavirus capital raisings have now topped $2.5 billion.
Cochlear Limited (ASX: COH) shored up its liquidity a fortnight ago with an $880 million institutional placement priced at $140 per share. This will now be followed by a share purchase plan of up to $50 million, approved at $140 a share. Cochlear shares are currently trading at $189.
Southern Cross' fellow advertising share oOh!Media Ltd (ASX: OML) completed a $167 million raising at the end of March consisting of a $39 million placement and a $128 million non-renounceable entitlement offer. The offer was priced at 53 cents a share, with oOh!media shares now trading at 65 cents.
IDP Education Ltd (ASX: IEL) raised $225 million via an institutional placement last week at $10.65 a share. A share purchase plan aims to raise another $15 million. Funds will be used to support the business during current macroeconomic uncertainty by materially increasing liquidity. IDP Education shares are now trading at $13.13.
More to come
A wave of equity capitalisations is expected in the market in coming weeks as companies ask investors to support them through the pandemic.
According to the Australian Financial Review, bankers are expecting the biggest bailout by shareholders since the global financial crisis, when ASX companies raised more than $100 billion from equity markets.
