Trainline raising £150m to help it weather COVID-19 booking slump

Kumutha Ramanathan
·Contributor
·2 min read
Trainline logo is reflected on a screen-displayed stock graph in this picture illustration June 20, 2019.  REUTERS/Dado Ruvic/Illustration
Trainline said the cash raised will help the business invest in possible future growth opportunities. Photo: Dado Ruvic/Reuters

Trainline (TRN.L) announced on Thursday that it will create £150m ($206.62m) in convertible bonds to get through the COVID-19 turbulence that has hit the transportation, leisure and hospitality sector since the pandemic began.

Shares were down 6.4% in London at around 4pm.

Trainline shares fell as much as 7% on Thursday as the company struggles with mounting COVID-19 restrictions that discourage people from traveling. Chart: Yahoo Finance
Trainline shares fell as much as 7% on Thursday as the company struggles with mounting COVID-19 restrictions that discourage people from traveling. Chart: Yahoo Finance

Trainline said the net proceeds of the five-year bonds will “provide additional liquidity, protecting the business further in an extended COVID downturn scenario while giving greater flexibility to invest in possible future growth opportunities.”

The liquidity buffer is much needed as fewer people use public transportation, and hence the need for the app, in the face of coronavirus-related restrictions.

The European train and coach app company had announced plans of a covenant waiver on 29 April 2020 with its lending partners as it struggled through the pandemic. This means the lenders waived the right to demand repayment, as long as Trainline’s net debt position did not exceed 3.75 times the adjusted net income (or earnings) with interest, taxes, depreciation, and amortisation for the prior twelve months.

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Upon announcing the convertible bond, Trainline has also secured a further extension to the covenant waiver until 31 August 2022.

The bonds will carry a coupon of 1% per annum payable semi-annually in equal instalments on 14 January and 14 July of each year, with the first interest payment date being 14 July 2021.

The initial bond conversion price will be set at a premium of 50% above the volume weighted average price of a share on the London Stock Exchange on Thursday this week, with settlement and delivery due to take place next Thursday, it added.

JP Morgan (JPM), Cazenove Ltd and Morgan Stanley & Co International PLC (MS) will be the joint global coordinators, while also working with HSBC Holdings PLC (HSBC) as joint bookrunners for the offering.

Trainline is just the latest UK business that is raising cash to get through the pandemic. Mitchells & Butlers (MAB.L) — the owner of All Bar One and Harvester chains — announced on Thursday that it may seek an emergency cash raise after sales fell by more than two-thirds in the first quarter.

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