On the Beach has announced it is planning to raise further funds through an immediate share placing to see it through the pandemic.

It said the Placing, which represents around 5% of OTB’s existing share capital, will give it more ‘flexibility, resilience and firepower’.

The online travel agent hit the headlines in May when it announced it was withdrawing summer 2021 holidays from sale due to ever-changing travel restrictions. It went on to announce a £9.5m pre-tax loss for the first half of its financial year.

OTB said it now needs to raise more money to make sure it can increase its marketing spend and to support necessary short-term investment next year, when demand is expected to bounce back.

 It said it also needs to ensure that it is able to protect its market position and gain market share when there is a recovery.

The online travel agent said the additional funding would give it the headroom to invest more in its digital platforms and in both online and offline marketing, plus convert more enquiries into bookings by offering low-deposit schemes.

A share placing is when new equity shares are issued to individual investors, corporate entities, or small groups of investors to raise capital.

This increases the amount of shares in issue and dilutes existing shareholders. Share placings usually go to institutions to fund company growth; they are not made available to the public.

On the Beach said all directors of the company and certain members of the executive management team intend to take part in the placing.

Chief Executive Simon Cooper added: “The duration of the pandemic and its disruption to the travel sector has been more than anyone could have imagined and whilst On the Beach has undertaken numerous actions to best navigate the crisis, manage risk and conserve cash, this placing will provide the Group with greater resilience, flexibility and firepower as demand for holidays recover..

“The Placing will position the Group strongly for growth while ensuring On the Beach is able to protect its strong market position and appropriately gain market share when there is an eventual recovery in demand.

“On the Beach’s asset light, flexible model and ring-fenced trust account for customer monies sets us apart from our competitors as our lack of reliance on customer deposits to fund working capital allows us to focus on what is right for the customer.

“As a result of this, the previously announced extension of our off-sale period from 30 June to 31 August 2021 was a decision taken to focus on supporting customers with bookings due to travel this summer and, given the continued uncertainty across the sector as evidenced in Portugal, it appears this was the right call.

“During this period of little to no travel, we continue to maintain, repair and re-invigorate the On the Beach brand, recently launching our ‘we’re ready when you are’ campaign, designed to increase brand awareness, welcoming our customers back when there is more certainty across the short-haul beach holiday market.

“I would like to take this opportunity to thank our existing shareholders for their continued support and I would also like to thank the wider team across the Group for their resilience and professionalism in helping our customers through these challenging times.”