Catering Giant Compass Considers $2 Billion Share Sale

(Bloomberg) -- Compass Group Plc is considering raising about $2 billion in new equity to help navigate the coronavirus pandemic, in what could become the U.K.’s biggest share sale this year, people with knowledge of the matter said.

The world’s biggest catering services provider is speaking with advisers about a potential stock offering, the people said, asking not to be identified because the information is private. The U.K.-based firm is considering selling shares equal to roughly 10% of its issued capital, the people said.

Compass could announce the fundraising as soon as next week, the people said. Its shares have fallen 42% in London trading this year, giving the company a market value of about 17.3 billion pounds ($21 billion). The benchmark FTSE 100 Index has declined about 23% over the same period.

“We continue to evaluate the merits of a range of options that would further increase our resilience through the current situation and enable us to continue to invest in the business,” Compass said in a London regulatory filing Friday. The company hasn’t decided whether to proceed with a capital raise, and the timing and size of any deal still need to be determined, it said.

An equity offering by Compass could become the largest in the U.K. this year, surpassing events manager and publisher Informa Plc’s 1 billion-pound offering last month, according to data compiled by Bloomberg. It would join companies including insurer Hiscox Ltd. and online fashion retailer Asos Plc in seeking to sell new stock since the outbreak of the coronavirus pandemic.

Compass runs corporate cafeterias and serves food at schools, hospitals and sports stadiums. The company’s customers include Bank of America Corp., Coca-Cola Co. and Google, according to its website.

The company said last month it is suspending dividends and about 55% of its business is closed due to lockdowns in various countries. Chief Executive Officer Dominic Blakemore has temporarily taken a 30% reduction in salary, while the company’s board members and executive committee have reduced their compensation by 25%. Compass has also secured waivers on covenants from holders of its U.S. private placement debt, it said in Friday’s statement.

Compass employs around 600,000 workers and serves 5.5 billion meals annually at more than 55,000 client locations, its annual report shows. It also provides other support work like cleaning, facilities management and reception services.

©2020 Bloomberg L.P.

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