J D Wetherspoon calls time on cash crisis with another rights issue

by | Jan 20, 2021

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown

‘J D Wetherspoon has called time on its cash flow crisis and has raised £93.7 million through another rights issue. The placing price of £11.20 represents a discount of 5.3% to its closing price yesterday. It’s the second time the company has gone cap in hand to shareholders to raise funds during the pandemic. This time round it’s not just a case of battening down the hatches and waiting for the storm to subside, the company aims to use some of this cash injection, to snap up prime locations from rivals in distress. It’s confident that pent up demand for socialising in pubs and restaurants will see a huge upswing in trade once its venues reopen, as hoped, at the end of March.


‘After years of steady growth, the restrictions imposed by the government to limit the spread of infection have wreaked havoc on Wetherspoon’s business model. Maintaining high numbers of customers is key for the company given that many of its venues are large and to keep costs low, it needs to sell high volumes.


‘It has a young customer base who have been less fearful of venturing out when restrictions do ease, which does bode well for recovery unless there is another twist in the trajectory of the virus. While queues may form round the blocks for its high street pubs once the latest lockdown finally ends, its airport business is likely to continue to stay depressed with global travel not expected to fully rebound until 2023. J D Wetherspoon may be building a war chest for expansion, but some of that money will inevitably leak away to plug holes elsewhere while the business recovers.’

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