Informa reaches out to investors for £1bn and suspends dividend

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The world’s biggest exhibitions group has reached out to investors for £1 billion to help it to weather the shutdown of large parts of the world economy.

Informa, which organises more than 500 events a year, including the Lloyds Bank National Business Awards and the Monaco Yacht Show, said that the impact of coronavirus had been more severe than it had first thought.

Lord Carter of Barnes, chief executive, said that there had been “material disruption” to its events division, with half the global population under lockdown. Its exhibitions division would bounce back, but the recovery would be “gradual and phased” and was likely to stretch into the third quarter of the year, he added.

The company, which also owns the Lloyd’s List shipping news service and Taylor & Francis, the academic publisher, announced measures designed to tide it through the near term. It sold 250.2 million shares at 400p each to institutional investors, which own more than 99 per cent of the company. The cash-call was priced at a 4 per cent discount to Wednesday’s close.

“This will give us enough strength on our balance sheet to see us through 2020, whatever happens,” Lord Carter, a former head of Ofcom and a minister in the last Labour government, said.

Informa also has applied to the Bank of England to use its Covid-19 emergency commercial paper programme. It has suspended its dividend, axed discretionary spending and postponed salary reviews for employees.

Lord Carter, 56, and his chief financial officer are taking 33 per cent salary cuts and senior managers and non-executives will have their pay reduced by 25 per cent. Informa aims to reduce its debts from £2.36 billion to £1.4 billion.

Shares in Informa, which are down more than 50 per cent since the start of the year, rose 20½p, or 5 per cent, to 437½p last night, valuing the company at £5.5 billion.

Informa came into its present form in 1998 through the combination of IBC Group and Lloyd’s of London Press. In 2018 it bought UBM, an events specialist, for £3.8 billion. That turned Informa into the world’s largest exhibitions company, but increased its borrowings.

Exhibitions account for 65 per cent of revenue, with the remainder coming from subscriptions to its mainly digital publication and business information services, which have proved resilient.

Informa has postponed shows that generate £460 million of revenue and hopes to hold them later in the year. It has cancelled some events, accounting for less than 10 per cent of exhibition revenues. Most customers had rebooked for the delayed events rather than request a refund, it said.

Lord Carter said that the shutdown had become “progressively deeper and more far-reaching” than had at first appeared. The company was “facing material disruption in our events-related businesses, with expectations for a gradual and phased recovery”.

Informa said that it was in talks with the holders of more than £1 billion of debt that it had raised in the US private bond market. Those loans stipulate that Informa must keep its debt levels below 3.5 times its underlying earnings.

“Because we’ve seen more than 60 per cent of revenue go on pause, the likelihood is that we might have got near to or over those covenant levels,” Lord Carter said. With the fresh capital, the company has “other options” if it can’t agree a change to the terms of its debt, according to Lord Carter. These could include buying back the bonds.