Pandox has decided to withdraw its dividend after reporting that business had reduced “substantially” during the past fortnight.
The company saw its share price fall by over 20% on Tuesday, but reassured shareholders that its financial and liquidity position was “very strong”.
The group said that, as a consequence of deteriorating business conditions and the large uncertainty regarding the market development, Pandox’s board of directors had decided to withdraw the previous dividend proposal for 2019 to the AGM in the amount of SKr3.60 per share, in order to further strengthen the company’s financial position.
Pandox estimated that Ebitda would be approximately 15% to 20% lower than in the corresponding period last year. The company estimated that the negative earnings effect would be “considerably larger” in the second quarter, adding that it would “like to stress that these estimates are highly uncertain”.
The group said that, as per 16 March 2020, liquid funds and unutilised credit facilities amounted to approximately SKr4,500m. Pandox’s financial covenants were mainly based on loan to value and interest coverage ratios “at comfortable levels and can be cured. Pandox can therefore withstand a considerable decrease in business activity in the company’s markets”.
The company said that it followed and evaluated the business situation continuously “and has a close dialogue with business partners in the business segment Property Management regarding earnings development and liquidity for respective party. Contractual minimum guaranteed rent and fixed rent amount to approximately SKr2,000m on an annual basis. Minimum guaranteed rent is accumulated and normally settled half-year and full year”.
In its operator activities, the company said that it had reduced staff and increased coordination of operations between the hotels. It was also planning temporary closures of certain hotels in Belgium and Germany.
Planned investments in the existing hotel property portfolio have been reduced, with the focus on finalising already ongoing projects. In total, planned investments for the current year amount to approximately SKr550m, of which approximately SKr50m was maintenance.