UPDATE 1-Whitbread to raise $1.2 bln to weather COVID-19 crisis as profit drops

(Adds background, details from statement)

May 21 (Reuters) - Premier Inn owner Whitbread Plc said on Thursday it would raise 1.01 billion pounds ($1.23 billion) through a rights issue as the company looks to bolster its balance sheet amid the coronavirus crisis, which led to a drop in annual earnings.

Through the rights issue, Whitbread is proposing to offer one new share for every two existing shares.

The company said adjusted pretax profit dropped to 358 million pounds for the year ended Feb. 27 from 390 million pounds a year earlier.

Whitbread, which suspended dividend and shut all its hotels and restaurants in March due to the outbreak, said it has reopened 16 hotels in Germany. It also expects hotels and restaurants in the UK to remain closed or operate at low occupancy levels until September.

“Demand recovery is expected to be slow as social distancing restrictions are gradually relaxed,” the company said.

The hospitality sector, one of the hardest hit from the COVID-19 pandemic, is expected to face many challenges and implement strict health guidelines as it recovers from the crisis.

$1 = 0.8201 pounds Reporting by Muvija M in Bengaluru; Editing by Ramakrishnan M.