Troubled Bolton-based online electricals retailer AO is making an investor cash call to raise about £40 million following recent share price falls.
The group said it will raise capital from both new and existing shareholders – including a placing for small retail investors – to boost its balance sheet.
AO said that the move will “increase the company’s liquidity back to historic levels… strengthen the balance sheet for suppliers and provide the flexibility to capitalise on market opportunities.”
It follows two days of steep share declines after it emerged on Sunday that credit insurer Atradius had cut cover for the firm’s suppliers.
AO World chief executive John Roberts said: “In addition to being a sensible piece of financial housekeeping given the short-term macroeconomic uncertainty, this capital raise will give us the necessary foundation from which to go after the significant long-term growth opportunities that we see for AO in the UK.”
The firm said the “post-pandemic retail environment is substantially shifting” as some retailers are seeing the online boom experienced during lockdowns ease off, while there are also concerns over consumer spending on big items.
Roberts insisted the so-called white goods market will hold firm, saying it has stabilised around levels seen in April and May this year: “Our core major domestic appliance category is proving to be resilient over time, given the natural replacement cycle of white goods and their non-discretionary nature,” he said.
The group’s share price has plunged from the historic highs seen by many online retailers at the height of the pandemic. AO last month announced that it is to close its German business – which accounts for around 10 per cent of annual group revenues – after eight years.
