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UK retailer AO World plans to raise $48 million capital

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·1-min read
FILE PHOTO: AO distribution centre in Crewe, Cheshire
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(Reuters) -British online electricals retailer AO World plans to raise about 40 million pounds ($47.7 million) in new capital to bolster its balance sheet and boost liquidity, days after its stock suffered heavy blows on cash crunch fears.

The announcement comes two days after the retailer said a third-party credit insurer serving some of its suppliers had "rebased" its cover in May to reflect post-COVID sales levels.

Shares in the electricals seller lost about a third of its value over two trading sessions this week following a Sunday Times report that the company was facing a cash crunch after credit insurer Atradius slashed cover. AO World stock dropped more than 57% so far this year.

AO World said it would place new ordinary shares at 43 pence apiece, an 8.5% discount to the stock's previous close.

"The net proceeds of the capital raise will strengthen the balance sheet and increase liquidity back to historic levels (relative to revenue base), and provide the flexibility to capitalise on market opportunities," AO World said in a statement on Wednesday.

Last month, the Bolton, UK-based company said it would close its struggling business in Germany as its prospects were deteriorating.

($1 = 0.8390 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Uttaresh.V and Sherry Jacob-Phillips)

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