Recapitalisation plan helps Brait to narrow losses

Investment holding company Brait has narrowed its annual losses as it embarks on a recapitalisation strategy to reduce debt and strengthen the balance sheet.

The group, which holds investments in Virgin Active gyms, fast-moving consumer goods company Premier and retailer New Look, reported a headline loss per share of 13c for the year to end-March after a loss of 70c a year ago. Its net asset value per share declined 8% to R6.52.

Its loss for the year narrowed to R171m from R928m a year ago.

Earlier in June Brait released details of its recapitalisation plan, which includes a three-year extension of the maturities of its bonds to December 2027, a fully underwritten rights offer of R1.5bn and a three-year extension to March 2028, with the facility limit increased from R0.6bn to R1bn, for Brait’s revolving credit facility, for which the lending banks have signed a credit-approved term sheet.

“The recapitalisation meaningfully reduces the group’s debt and strengthens the Brait balance sheet, providing runway for all stakeholders to benefit from the continued recovery in Virgin Active and New Look and the growth in Premier,” it said.

Brait said the operational turnaround in Virgin Active — which comprises 67% of the group’s total assets — continued, with all territories now ebitda positive. Active membership increased to 1.021-million over the past 12 months.

Premier, which accounts for 18% of Brait’s assets, performed strongly despite adverse trading conditions and the effect of inflation on consumer spending. It reported a 35% rise in normalised headline earnings per share (HEPS) for the year to end-March.

Fashion retailer New Look, which represents 7% of Brait’s total assets, reported an 8.8% fall in revenue in a challenging UK fashion retail operating environment where market volumes declined. Unseasonal weather and a rapidly changing competitive landscape remain key factors for management to navigate.

Since the February 2020 change in strategy to monetise its asset base to optimise the return of capital to its shareholders, Brait has realised cumulative disposal proceeds of R9.1bn, which has mostly been applied to repay the revolving credit facility. 
This strategy had not changed, it said.

The three-year extensions to the maturities of the bonds in terms of the recapitalisation provided runway for all stakeholders to benefit from the recovery in Virgin Active and New Look in addition to the growth in Premier, which also provided Brait with the option to choose the earliest optimal exit window for each asset, it said.

mackenziej@arena.africa