March 24, 2020 / 3:38 PM / 15 days ago

UPDATE 1-Whitbread suspends dividend, shuts hotels on coronavirus fears

(Adds details on employees, outlook, background)

March 24 (Reuters) - British hotel operator Whitbread on Tuesday suspended shareholders’ dividend and said it would immediately shut all its hotels and restaurants due to the coronavirus outbreak.

The company, which was temporarily shutting all Premier Inn hotels in the UK and Germany, said the closure may amount to a “technical event of default” under its banking arrangements and some other financial obligations.

It, however, added that it has material headroom in its funding facilities and will pay its rents this quarter.

“At this point it is not possible to predict the full extent of the market down-turn and the impact on the business’s revenues,” the hotel operator said.

A significant number of its site teams have been placed on a temporary furlough, with all employees on full pay, Whitbread said, adding the recently announced government package was expected to pay up to 80% of their salaries.

It said support measures for the hospitality industry was expected to save the business around 120 million pounds ($140.44 million) in fiscal year 2021, which will have a positive impact on cashflow in the year.

The 278-year firm also said it was in talks with the UK government on the use of some hotels near hospitals, to support front-line key workers.

The company, owner of brands such as Beefeater, Brewers Fayre and Bar + Block, has been more focused on hotels since selling its Costa Coffee business for 3.9 billion pounds in 2018.

$1 = 0.8545 pounds Reporting by Tanishaa Nadkar in Bengaluru; Editing by Shinjini Ganguli

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