Mecca Owner Hits Investors for Tens of Millions

On Thursday, the owner of Mecca Bingo, the Rank Group, will summon investors to dig deep as the operator aims to balance the books. Rank have already been hammered by the global impact of covid-19 (as have many others) and they’re expected to take a mighty blow once again now that new lockdown measures are very much in effect in England.

Rank will signal plans for what’s known as ‘share placing’ in a bid to raise money, and not just a couple of thousand – but tens of millions! Why so much money? The vast sum of money is needed to strengthen the balance sheet so as not to go under completely if we ever manage to make it out of this global pandemic.

Fast-track placing terms state that the likes of Rank can request to raise up to 20% of their market value under emergency rules, which would result in a sum of approximately £70m. It was unclear on Wednesday night whether Rank (who also owns the Grosvenor casino chain) needed to raise more capital, but we know this is a controversial move from the operator.

Cough Up or Else

Mecca Bingo owner faced backlash only last week after it was revealed top executives were in line for huge share windfalls, and a whole year earlier than originally planned! Their annual general meeting may have gone swimmingly, but the investors will be swallowing all the information and it will be hard to take what with the big share payouts still very much on the table.

Should any institutional shareholders reject the request by Rank in an attempt to revolt, they are being warned that Rank is majority owned by a single Malaysian shareholder, and any attempts to block the proposals will be diluted. Another reason why this news is going down like a bucket of cold sick is the fact the company furloughed thousands of its staff during the first wave and will be doing so again!

It’s a shame that employees get furloughed and some may even lose their jobs – take Rank’s Belgian casino for example; they recently announced they would be selling the business for £25m and now those staff may not even have jobs to go back to after the sale, while big execs receive lavish payouts! While it’s rumoured city investors plan to oppose the company’s pay policy, Institutional Shareholder Services (ISS) revealed Rank are looking to amend the terms put in place back in 2018, in which it can award shares under a long-term incentive scheme – ISS said:

"Expanded discretion under the proposed remuneration policy allows for amendments to be made to the outstanding block award, suggesting potential adjustments in light of disruption from COVID-19, though the company has committed to engaging with major shareholders prior to exercising this discretion. Overall, shareholder support is not considered warranted.”

You’d have thought that with the brand taking a hammering and jobs being lost, shareholders would take a step back and decline any offer of a bonus, but sadly no.

Source: “Mecca Bingo’s Owner Rank Places Bet on Cash Call as Second Lockdown Hits”. Sky News. November 4, 2020.