Fortress stake boosts Arlen
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Your support makes all the difference.SHARES in Arlen, the electrical accessories group, jumped 25 per cent to 35p yesterday after the company announced that Fortress Trust was to take a 29.9 per cent stake.
The investment will come via a one-for-one rights issue at 21p, underwritten by Fortress, which will raise pounds 7m before expenses.
Arlen said the money would be used to reduce debt and develop the group's business. Borrowings were equivalent to 43 per cent of shareholders' funds when Arlen reported its half-year results in December.
It returned to profit in the six months to 30 September, chalking up pre-tax profits of pounds 150,000, having made losses of pounds 527,000 the previous year.
The company said that it had explored various ways to raise new capital but that the deal with Fortress, an investment company, was the best option.
Four directors of Fortress, including its chairman, Greville Howard, will join the Arlen board as non-executives.
If Fortress does not acquire enough shares through rights renounced or the underwriting it will subscribe directly for new Arlen shares at 23.5p up to the 29.9 per cent limit allowed before a full takeover bid is triggered.
The company said the rights and subscription prices reflected Arlen's share price of 14p at the time of discussions with Fortress. Although the deal had been reached in principle it was subject to shareholder approval.
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