LIG rescue rights goes to deep discount: Cash call will raise 115m pounds to reconstruct balance sheet
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.THE faltering stock market has undermined London International's rescue refinancing, forcing the troubled condom group to settle for a deeply discounted 70p-a- share, one-for-one rights issue.
City expectations had been for a two-for-one rights at around pounds 1. But the rapidly softening appetite of investors for share issues has meant a scaling back and the shares dropped 8.5p to 90.5p.
Nick Hodges, the company's chief executive, put a brave face on it yesterday. 'At least we didn't have to pull ours,' he said.
The rights issue, which has been underwritten by SG Warburg, will raise pounds 115m. It is needed to reconstruct LIG's battered balance sheet, where net assets have been wiped out by its disastrous diversification into its now-sold ColourCare photo processing business.
It is accompanied by pounds 114.5m of unsecured borrowing facilities and revised terms on dollars 50m ( pounds 34m) of existing unsecured loan notes.
LIG's full-year figures show the extent of the damage caused by ColourCare, and, to a lesser extent, trading problems in its core condoms and gloves businesses.
Sales of pounds 396.6m ( pounds 416m) in the year ended March generated operating profits of pounds 7.5m ( pounds 47.5m) including a pounds 13.2m loss from photoprocessing ( pounds 3.9m loss).
But the company had to make a pounds 168.3m exceptional charge ( pounds 4.7m), of which pounds 91.4m reflected provisions on the disposal of substantially all of the ColourCare business to its management. That reduced shareholders' funds to a deficit of pounds 10.5m, while net borrowings soared to pounds 168.4m.
After the restructuring the company will have net assets of pounds 104.5m and net borrowings of pounds 82.1m giving a gearing of 78 per cent. It hopes to return to profits this year.
LIG's new management has refocused the business, and will concentrate on developing its core Durex condoms and its state-of- the-art surgical gloves. Non-core businesses are being progressively disposed of and the company has embarked on a massive transfer of manufacturing capacity to cheaper facilities in the Far East.
(Photograph omitted)
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments