Ladbrokes confirm rights issue to raise 275 million

GBP 275 million to be raised

UK online and offline gambling group Ladbrokes plc has confirmed market rumours that it is to seek a rights issue to raise more cash (see previous InfoPowa report).

In a statement Thursday the British bookie firm confirmed that it will seek to raise GBP 275 million through a discounted rights issue.

The company also revealed third quarter results showing net gaming revenue down 15 percent, compounding lower revenues recorded in the first half of the year (see previous InfoPowa report).

Ladbrokes spokesmen said the company would offer a fully underwritten issue of 301 million new shares at 95p a share, a discount of almost fifty percent on yesterday's closing market price of 181.2p.

The cash raised in the issue will be used to reduce a GBP 962 million debt burden down to a more manageable GBP 687 million and to reinforce the balance sheet with extra capital.

Explaining the weak Q3 results, the company said these were the result of a bad run of losses to football gamblers, in a season where the first 66 Premier League matches saw just four draws.

Poker net revenue over the three-month period underperformed, falling 21 percent, and operating profits slumped badly by 58 percent to GBP 22.4 million.

"The rights issue is something the board has been considering for some time," chief exec Chris Bell told reporters. "Bank lending has been difficult over the last 12 months. It has been a difficult quarter, particularly due to the football results. We have got to take the level of debt down and this puts the right capital structure in place for the future."

On the positive side, Ladbrokes casino and bingo revenues in the third quarter were up 5 percent and 3 percent respectively.

Investors will not be happy with the news that the company intends to pass on a final dividend this year, although it hopes to be better placed to pay an interim in 2010.

GBP 2.6 million savings in staffing and improved operational efficiency have been identified by the company in its e-gaming division, which will be moving to Gibraltar in order to compete from a more favourable tax regime. Further savings of some GBP 3.9 million will arise next year.

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