Helloworld Travel has announced a $50 million capital raising at a hefty discount to bolster its balance sheet as the travel company looks to survive the coronavirus pandemic.
The company on Thursday said it expects transaction volumes to remain at 10 to 12 per cent of previous levels until September and then slowly increase as state borders and the possible trans-Tasman travel bubble opens.
It has reduced operating costs from around $23 million to about $2 million a month, including the wage subsidy programs in Australia and New Zealand.
It has closed offices in Manila and Mumbai, sold off its US wholesale operation and negotiated cost reductions from landlords and suppliers.
Helloworld has stood down 700 of its 1,500 personnel and the other 800 are working reduced hours, representing about 480 full-time equivalent employees.
Its senior executives took no pay from late March until June, with senior management now being paid 60 per cent of their previous remuneration and two executive directors getting 20 per cent of pre-COVID levels.
About five per cent of its 2,500 franchisees have elected to close and it is working with the rest to promote domestic travel destinations.
Helloworld said the equity raising would consist of a $27.1 million institutional placement at $1.65 a share, representing a 16 per cent discount to Wednesday’s closing price, plus a $22.9 million 1-for-9 entitlement offer at the same price.
The shares are currently in a trading halt.
The company said that the post-COVID complexities of international travel would increase the importance of travel agents, but that it didn’t anticipate a return to significant air capacity until the second half of 2021.
The equity raising would give Helloworld sufficient liquidity to operate through the end of 2022.
Chief executive Andrew Burnes and executive director Cinzia Burnes have indicated they will subscribe to $5 million in new shares, 70 per cent of their entitlement.
Helloworld shares are down 60 per cent this year, having last traded at $1.965.