Budget operator The Gym Group has raised around £41m through a share issue, in order to help it weather the effects of the UK-wide shutdown of its sites.

The company has placed 27.4m new ordinary shares at 150p each, representing a 6.8 per cent discount to the closing share price of 161p a day earlier (16 April).

In a statement, the company said the placing was carried out through Numis Securities and Peel Hunt, who acted as joint bookrunners.

In addition to the new shares, a number of the company's directors – and some members of the executive management team – have agreed to subscribe for new shares to the tune of £175,000.

Together, the placing and subscription have raised gross proceeds of approximately £41.3m.

In a statement, the company said: "The net proceeds of the placing and subscription will be used to strengthen our balance sheet and provide liquidity whilst our gyms are closed during this period of unprecedented COVID-19 disruption."

In additional efforts to conserve cash, the company said it was in "ongoing discussions" with landlords, suppliers and employee stakeholders.

The cash-saving measures have also seen the salaries of executive directors being temporarily reduced – and the executive team has also deferred half of their bonus awards from 2019.

In a statement, the company said the measures would help it bounce back quicker and allow it to continue its expansion plans, once the crisis is over and restrictions are lifted.

"The board believes that a strengthened balance sheet will enable the company to take advantage of growth opportunities in the immediate aftermath of the COVID-19 crisis both in terms of membership acquisition and by restarting its site roll-out programme," the statement reads.

CEO Richard Darwin added: ”We are grateful for the support in these unprecedented times and are confident that the business now has sufficient liquidity to weather the Board’s most pessimistic trading scenario.

"We continue to believe in the long term attractive fundamentals of the low-cost gym sector and our strengthened balance sheet will enable us to take advantage of growth opportunities that arise in the immediate aftermath of the crisis.”

On 19 March 2020, in anticipation of the closures, the Gym Group put in place a number of actions to reduce cash outgoings – including halting the rollout of new sites and reducing both capital and operating expenditure to essential spend only.

The company also commenced discussions with its existing lenders – HSBC, Natwest and Banco de Sabadell – which led to it receiving credit approval for an amendment to its existing £70m bank facility, maturing October 2023. The deal will provide additional commitments of £30m for an 18 month period.

The Gym Group revealed that the actions it has taken have reduced the company’s monthly cash burn during the temporary closure period to around £5m.