Pendragon asks investors for £71m to pay off debt

Pendragon, Britain's biggest motor retailer, is to raise £71m through a discounted rights issue in order to tackle its debts.

New shares valued at just 10p each will be offered to existing shareholders on the basis of nine for every eight already held, the company said yesterday.

Shares in the company initially fell almost 24 per cent before ending down just 0.25p at 21.5p, giving an effective price after the issue of 15.4p.

Pendragon – which owns the Stratstone, Evans Halshaw and Chatfields car dealership chains – has also agreed a plan that will eliminate the group's pension deficit and create cash savings of £46m by the end of 2014.