Arcadian calls for pounds 18.6m

ARCADIAN International, the property investor and developer, is raising pounds 18.6m in a rights issue to finance the purchase of eight hotels in a deal that marks a change in strategy.

News of the six-for-one issue at 35p was accompanied by an announcement that the company made a pre-tax loss of pounds 440,000 ( pounds 853,000) in the year to 30 April.

Arcadian is paying pounds 3m for six hotels owned by Clipper and pounds 5.5m for two hotels from the receiver of Hidden Hotels, all in southern England.

The rest of the money will be used to reduce Clipper's bank debt and fund development projects of the enlarged group. The Clipper hotels have been valued at pounds 15.87m by the surveyors Weatherall Green & Smith.

News of a deal had been expected following the suspension of Arcadian shares in October at 60p. Robert Breare, chief executive, said: 'We are buying hotels with strong growth potential at good prices at a particularly advantageous time. The acquisitions provide Arcadian with a strategic foothold in the hotel sector.'

He said the deal placed a greater emphasis on Arcadian's role as a hotel manager rather than a mere investor in development projects.

Arcadian's turnover last year dropped to pounds 326,000 from pounds 6.3m. For the third year running there is no dividend, but Mr Breare was optimistic of resuming payments soon.