Alexon suspension fuels rights talk

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The Independent Online
THE MARKET readied itself for another rights issue yesterday after shares in Alexon, the troubled fashion retailer, were suspended at 78p. John Osborn, its new chief executive, is also expected to restate last year's results later this week.

Analysts said they expected Alexon to raise capital of between pounds 15 and pounds 20m in the rights issue. Its debts are thought to total around pounds 25m.

Alexon's figures for the year to January 1993 showed pre-tax losses of pounds 986,000 after a poor performance by Dash leisurewear and the company's refusal to cut margins. It made profits of pounds 11.3m in the previous year.

Yesterday analysts said the restated losses could exceed pounds 11m. 'The rights issue will take account of the fact that the stock is not worth what it says it is worth on the balance sheet,' one said.

'The brands have been protected. Stocks have not been discounted as much as they should have been.'

Mr Osborn was brought in from Sears as a troubleshooter in April after institutional shareholders forced the resignations of Laurence Snyder, chairman, and Ruth Henderson and Peter Risdale, joint chief executives.

Yesterday Mr Osborn said negotiations for raising new equity capital and bank facilities were nearing completion, but the company had requested the shares' suspension following weekend press speculation about an impending rights issue.

With its shares at 78p, Alexon is capitalised at pounds 22.5m. Analysts agree that there will have to be some discount on the share price in the rights issue, although one said: 'A one-for-one (issue) to raise pounds 15m is still fairly ambitious.'