TV and Stereo maker Bang & Olufsen (B&O) had announced today that it would be raising US$58 Million via a right issue which is equivalent to half its market value in order to survive the coronavirus crisis which has negatively impacted the growth of the company and its weak shares.
The shares of the company had fallen below 66% in the past year and has now further nose-dived by 9% on Tuesday making it the lowest in the history of the company since 1994.
The Danish company, known for its exclusive TVs and speakers that sell for up to $80,000, is joining other companies seeking emergency funds and rearranging debts as the coronavirus pandemic eats into corporate cash.
“Bang & Olufsen is in a serious situation, where we need to raise new capital to help us get through the global COVID-19 crisis,” Chairman Ole Andersen said in a statement. The company had struggled with declining sales even before the Coronavirus outbreak and the lockdowns of non-essential businesses has further paralysed the retail sales of the company worldwide. It has issued five profit warnings in just over a year.
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The company plans to hold a general meeting by June 3rd and it has already secured support from a number of institutional investors which includes its three largest Danish shareholders which are ATP, Chr. Augustinus Fabrikker and Færchfonden.
Sales for the 2019/20 financial year ending in May are now seen at the lower end of the guidance for a fall of 20%-29%. Currently, the operating margin of the company before special items is expected to be negative by between 10% – 15% and would probably end at the low end of the range.
The company expects sales of about 2.2 billion crowns (US$223,937,340) an operating loss before special items of 100 million crowns (US$10,178,970) and a negative free cash flow of about 200 million crowns (US$20,357,940).
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