Viva Leisure (ASX: VVA) share price drops 7% following capital raising efforts

The Viva Loisirs SA The share price (ASX: VVA) is approaching its lowest level in 52 weeks today. It comes after the operator of the health club provided the market with an update on its latest capital increase.

As of this writing, shares of Viva Leisure are down 7.60% to $ 1.58.

What has Viva Leisure announced?

In a statement to ASX, Viva Leisure announced that it had successfully completed its institutional placement of $ 11.7 million (before costs).

Offered at a price of $ 1.55 per share, the placement received strong support from new and existing institutional investors. This was initially a 9.4% discount from the last closing price of $ 1.71 on August 24. However, after the sharp drop in the Viva Leisure share price today, the offer reflects a slight discount of just under 2%.

The company said it would use the proceeds to strengthen its balance sheet and seek acquisition opportunities.

The newly created common shares will be issued on or about September 6.

How did Viva Leisure perform for FY21?

Last week Viva released its full year results for fiscal 2021 showing significant growth across the board. Here are some of the key indicators:

What happened in FY21 for Viva Leisure?

Viva Leisure reported that member retention and enrollment dynamics exceeded historical patterns when its health clubs were open. However, the stop-start lockdowns have disrupted the dynamics of listings and created additional costs to reopen and restore the previous momentum.

Throughout the year, all of the company’s facilities were open for 2 months without trade or restriction.

Nonetheless, there have been 11 months of positive net membership growth for the company.

In addition to the results, Viva Leisure also increased its portfolio, acquiring 21 greenfield locations and 15 acquisitions. Combining this with Viva Leisure and the Plus Fitness network, there are a total of 309 operating locations.

Management commentary

Viva Leisure CEO and Managing Director Harry Konstantinou commented on this exceptional achievement:

Despite a tough year where all of our facilities across Australia only opened for two months at a time, I’m proud of my team for successfully increasing all of the key metrics of membership, locations, revenue, EBITDA and NPAT.

Outlook for Viva Leisure in FY22?

The current COVID-19 lockdown has again had a significant impact on Viva Leisure’s operations for the first two months of FY22.

As such, it is estimated that July and August will reflect a drop in revenue of around $ 6.9 million. In addition, EBITDA should be impacted by $ 4.2 million.

The company introduced a “wait and see” approach to preserve cash reserves as much as possible. Future deployments and acquisitions are currently on hold until further notice.

Viva Leisure Stock Price Snapshot

Over the past 12 months, Viva Leisure stock has fallen more than 40%, with a drop of 45% since the start of the year.

Viva Leisure has a market capitalization of approximately $ 131.9 million, with approximately 81 million shares listed on its register.