Helloworld Raises $41.6m To Bolster Future Contingency Plan

Helloworld Travel Limited (HLO) has announced the successful completion of its $41.6 million capital raising to help the business further navigate the impact of COVID-19.

Helloworld Travel Limited (HLO) has announced the successful completion of its $41.6 million capital raising to help the business further navigate the impact of COVID-19.

Helloworld Travel Limited’s 30.3 million new share offer at $1.65 per share opened and closed on the same day – Thursday, 16 July, with the company reporting strong support from institutional investors.

The net result was approximately $41.6 million with HLO saying in a statement to the ASX that several new institutional (company) investors had been introduced as Helloworld shareholders.

In the company’s ‘Operating Update and Equity Raising’ presentation, HLO said that they are assisting their 2,500 retail travel agents and brokers to manage their way through this period until demand returns including suspending all franchise and marketing fees from 1 April 2020 to 31 March 2021.

HLO also noted that they are working with the network to promote available destinations with a wide range of domestic products now in the market.

To date, 5% representing approximately 125 stores of franchisees in Australia and New Zealand have elected to close their doors.

Helloworld currently employs 1,500 staff globally, with 800 working in the business on reduced hours, representing 480 full-timers on JobKeeper and 700 staff members who remain stood down.

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Andrew Burnes, CEO and Managing Director Helloworld Travel Limited

Helloworld’s CEO and Managing Director, Andrew Burnes said:

“The fact the placement attracted strong demand, with several new institutional investors introduced to the Helloworld register, demonstrates the market’s positive view on the long-term viability of the travel industry and their confidence in Helloworld Travel’s capacity to manage its way through the next 12-24 months as the world learns to cope with and eventually eliminate COVID-19.”

What’s HLO’s outlook for Domestic Travel?

Sierra Escapes, Piambong
Sierra Escapes, Piambong
  • HLO says that domestic flight frequencies have increased significantly since late June and are expected to continue to increase throughout the remainder of the year (despite current restrictions on VIC travellers).
  • Domestic carriers will continue to ramp up their services Australia wide as travel restrictions ease.
  • The continued increase in domestic air and land bookings off a low base, with a focus to continue on domestic tourism opportunities to capture travel demand ahead of expected return to international travel in 2022.

And International Travel?

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London Bridge
  • HLO believe that the post-COVID-19 complexities of international travel will only increase the importance and profile of travel agents.
  • Trans-Tasman travel is currently expected to open up later in 2020, which they anticipate will result in a resumption of quarantine free travel between Australia and New Zealand and possibly one or two Pacific Island nations.
  • Further bilateral “Bubbles” may subsequently open up in 2021 with a limited number of countries at first. They do not anticipate a return to significant air capacity and travel until Q1 or Q2 FY2022.

As a result, Helloworld expects to be well-positioned to improve its margins once travel returns to normal levels, though the company doesn’t anticipate turnover returning to previous 2019 levels until 2023.

A Retail Entitlement share offer will open on Thursday, 23 July for eligible franchisees and is expected to raise a further $5.4 million. The offer will close on Monday, 3 August 2020.

“As previously announced, the proceeds from the equity raising will provide Helloworld with the balance sheet liquidity and flexibility to maintain its operating and capital expenditure well into 2022.” Mr Burnes said.

Read the full ASX statements here.