Saga cuts 1,400 jobs, former owner to back 150 million stg capital raise

(Reuters) – UK-based over-50s holidays and insurance specialist Saga SAGA.L launched a 150 million pound ($194 million) capital raising on Thursday that will see former boss Roger De Haan return as non-executive chairman after the loss of 1,400 jobs.

De Haan, the son of Saga’s founder Sidney Isaac De Haan, was chief executive before Saga was sold in 2004 to private equity group Charterhouse and will backstop the new fundraising with up to 100 million pounds ($130 million) of his own money.

“The company I sold was doing brilliantly well. I don’t know what happened…but (it) had certainly lost its way,” De Haan said on a call with reporters.

In a statement hours after the results, Saga said it has completed the bookbuild process and raised gross proceeds of about 74.8 million pounds. Bookrunners have placed 623.3 million new shares at 12 pence a piece with some shareholders, De Haan and institutional investors.

Saga has taken a hammering from the shutdown of cruises globally and collapse of other travel this year, worsened by the company’s focus on older customers more at risk from the virus.

On Thursday it reported a first-half pretax loss of 55.5 million pounds versus a profit of 52.6 million pounds a year ago and suspended its dividend.

Shares in the company dropped 6.4% to 15 pence, down from a 2016 peak of 228 pence.

Saga said it would resume cruises this year, with the tour operations business expected to restart next April.

The company said as per a second placing, De Haan will subscribe for 124.2 million new shares. Depending on the extent of clawback, his stake in Saga will be between 16.6% and 26.4%.

Last week, Saga said it had rejected an unsolicited and highly conditional 33 pence a share indicative approach for the company from a consortium of two U.S. financial investors.

Reporting by Muvija M in Bengaluru and Carolyn Cohn in London; Editing by Anil D’Silva, Elaine Hardcastle and Toby Chopra

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