Allied Radio signals new strategy with rights issue

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The Independent Online
ALLIED Radio, the troubled Surrey local radio group suspended last week at 10.5p, has revealed details of its proposed rights issue and capital restructuring, writes Tom Stevenson.

As well as issuing 33.33 million new shares at 6p a share, raising pounds 1.55m after expenses, existing 25p ordinary shares will each be divided into one new ordinary share of 0.5p and 49 deferred shares of 0.5p each. The deferred shares will be listed but will have no voting or dividend rights and the right only to a very limited return on capital on liquidation.

In due course they will be cancelled and the balance, together with the share premium account, will be used to write off the pounds 7.2m deficit standing on the profit and loss account as of 30 September last year.

The rights issue, which has been underwritten by Credit Lyonnais, offers investors 3.61 new ordinary shares for every 10 existing shares held and 2.872 new ordinary shares for every pounds 1 of existing loan stock.

Loan stock holders will be offered 10 new shares for each pounds 1 of loan stock, with interest cancelled from 1 October.

In the year to end September, Allied lost pounds 1.9m before tax, up from pounds 1.72m the year before.

Turnover fell to pounds 3.7m (pounds 4.5m). The loss per share was 4.1p compared with 3.4p. There is no dividend.

The group said that a small operating profit in the first quarter of the current financial year had been produced by an unsustainable advertising pricing policy, which had now been addressed.

Brian Rowbotham, the chairman, said the first few months of this year had been difficult but there were encouraging signs that the company's new strategy was being implemented in a recovering market place.