Allied Leisure in pounds 12m cash call

ALLIED Leisure, the bowling hall and nightclub operator, has joined the growing list of companies asking shareholders for money. It has launched a rights issue to raise pounds 12m.

It is Allied's third cash call in as many years. It was launched yesterday at the same time as Allied reported lower profits and said it was paying a reduced dividend.

In addition, Richard Carr, Allied's chairman, is not subscribing to the rights attached to his 12.6 per cent stake.

Part of the reason for the rights issue is that shareholders have stopped the company from borrowing sums equivalent to more than 55 per cent of its net assets. The company has run up against that limit.

Some stock market sources said that in the light of circumstances surrounding the cash call the company might have difficulty getting full subscription to the issue.

However, Allied's own stockbroker, Williams de Broe, has underwritten the rights, ensuring that Allied will get its money.

Much of the pounds 12m rights cash will be injected into the development of a new leisure complex at Crystal Palace in south London. The total project will cost pounds 50m, and Allied's portion of the development, a 34-lane bowling alley and a nightclub, will cost pounds 8m.

Mr Carr said he believed the project would turn Crystal Palace into the 'Leicester Square of south London'.

Allied is offering seven new shares at 48p for every 10 held. The share price fell sharply from 58p to 49p yesterday morning, but recovered to end the day at 53p.

Mr Carr also said the leisure industry, which has been struggling against weak consumer spending for the past three years, was recovering. 'I believe that we have seen the bottom of the recession in our sector of the leisure industry.'

Interim pre-tax profits for the six months to 3 January were pounds 1.2m, down from pounds 1.6m. Earnings per share fell to 2.9p from 3.7p and the half-time dividend is cut from 1.5p to 1p.