Rank Group Raises £70 Million to Fortify Finances

The company that operates Mecca Bingo and Grosvenor Casinos, Rank Group, has secured £70 million through a placement and subscription.

Rank Group has issued 76,736,762 shares at 90 pence each through investment firms Peel Hunt and Goodbody Stockbrokers, a 4.3% premium to Rank’s closing price of 86.9 pence on the previous day (November 5).

Furthermore, Rank has subscribed for an additional 1,009,258 new ordinary shares at the same price using the PrimaryBid platform.

The total of 77,746,020 shares issued represents 19.9% of Rank’s share capital and is the maximum amount that could be issued to raise funds.

The company stated that it will utilize the funds to “fortify the company’s financial position” and “provide ample operating capital to navigate this challenging market environment,” and to continue restructuring its operations, reiterating its statement made the previous day when it announced it was exploring a placement.

Additionally, the company announced that in the quarter ending September 30 (its first quarter of fiscal year 2020-21), the group’s comparable gaming revenue decreased by 52% and total net gaming revenue declined by 47%, with revenue decreasing in all divisions, including the digital division.

The Grosvenor locations owned by Rank Group experienced a substantial 74% reduction in income, while Mecca Bingo saw a 45% decrease. International earnings dropped by 26%, while digital revenue was down 3% compared to the same period in the 2019-20 financial year.

The company pointed out that Grosvenor locations were shut down for a significant portion of the quarter but stated they performed “above expectations” after reopening on August 15, although the 10pm curfew enforced in September had a “noticeable impact” on the end of the quarter.

The company mentioned that Mecca also performed above expectations after reopening on July 4.

In the meantime, the decrease in digital revenue was primarily attributed to the closure of retail operations, resulting in a lower contribution from its “more valuable multichannel customers,” while tighter affordability restrictions during the pandemic also played a part.

Rank’s income is likely to continue to be affected as UK land-based casinos and bingo halls are now required to close again in a new nationwide lockdown starting on November 5 until at least December 2.