| Coffee Republic to raise £800,000 to pay off debt |
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18/11/2008 00:37 (448 Day 20:19 minutes ago) | |||||
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The FINANCIAL -- According to caterersearch, Coffee Republic is seeking to raise £800,000 with a share placing to wipe out its debt and provide working capital.
The coffee shop operator, which now has 200 units, has seen rapid site growth since it switched to a franchising model at the expense of turnover, which slid 39.8% to £5.8m in the year to 30 March 2008.
Although in the six months to 28 September 2008 weekly franchise and concession income covered head office costs, the company said its debt – held by Barclays - was still constraining its ability to fund its expansion with cash generated by the business.
Following a “debt compromise arrangement” with Barclays and the creation of 2,666,667 new shares, the company will be, in effect, debt free if the placing is approved by shareholders at an Extraordinary General Meeting on 1 December.
James Muirhead, Coffee Republic’s finance director and a participant in the placing, said: “The debt compromise with Barclays offers the company a significant opportunity to eliminate its debt position on commercially attractive terms.”
Coffee Republic chairman Peter Breach and vice-chairman Steven Bartlett will also purchase additional shares as part of the move.
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