Shares in Saga rallied today after the company confirmed reports its former boss, Sir Roger De Haan, is returning to the boardroom and bringing £100million into the company with him.
The move was warmly welcomed as shares in the insurance and travel company rose 95 per cent as markets opened. But the excitement subsided, leaving them up nearly 38 per cent.
In a statement, Saga said: ‘The board unanimously considers that the proposed equity raise will support the execution of its reinvigorated strategy under its strengthened management team, which it believes will return Saga to sustainable growth and lead to the restoration of significant shareholder value.
Saga has been battered by the Covid-19 crisis but it is set to benefit from a £100m investment boost from former boss Sir Roger De Haan
‘Saga has continued to make good progress against the plan launched last year and has taken a series of actions in the last six months to protect the business from the significant disruption that has resulted from Covid-19, especially in relation to the group’s travel operations.’
Hargreaves Lansdown equity analyst William Ryder said that it was unsurprising that Saga needed extra cash.
He said: ‘In some ways, it would be hard to design a company more susceptible to a pandemic than the group’s travel operations – and Saga didn’t start the year in the best of health either.’
Over the weekend Saga said De Haan would return to the businesses as non-executive chair.
He will also be investing £100million into the firm, in a bid to stabilise its finances, as part of a £150million equity raise.
Around £60million of De Haan’s investment will be invested in shares which he will buy at 27p each, a big increase on Friday’s closing price of 13.61.
Shares briefly reached 26.6p, before dropping back to around 19p on Tuesday.
Ryder added: ‘The new money will dilute current shareholders, but we doubt there are too many long term investors left.
‘The shares have fallen heavily over the last few years, and the pandemic only threatened to administer the coup de grace.’