Online electricals retailer AO World has announced plans to raise around £40m through a share placing and primary bid offer to strengthen its balance sheet, increase liquidity back to historic levels and provide the flexibility to capitalise on market opportunities.
The company will place new ordinary shares of 0.25p each at 43p each. There will also be a separate offer of new ordinary shares at the placing price via the PrimaryBid platform.
Chief executive officer John Roberts said: “In addition to being a sensible piece of financial house-keeping given the short-term macroeconomic uncertainty, this capital raise will give us the necessary foundation from which to go after the significant long-term growth opportunities that we see for AO in the UK. It will also allow us to deliver on the new financial targets that we are setting today.
“Our core major domestic appliance category is proving to be resilient over time, given the natural replacement cycle of white goods and their non-discretionary nature. In addition, expanding into newer categories remains a key priority and a major opportunity for us.”
Earlier in the week, shares in AO World tumbled following a report it was facing a cash crunch. The company confirmed on Monday that one of the third-party credit insurers serving some of its suppliers had “rebased” its cover with respect to AO in May, to reflect post-Covid sales levels. However, it insisted this would have no effect on its liquidity position.
AO said at the time: “This was a reduction from the heightened levels that had been in place and required through the period of the pandemic. To date this rebased cover has had no effect on AO’s liquidity position which remains in-line with the board’s expectations for FY23.”
