Ashtead seeks pounds 20m for growth

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The Independent Online
ASHTEAD GROUP, Britain's second biggest non-operated plant hire business, is raising pounds 20.4m in a rights issue to finance the next stage of its growth.

The one-for-three issue of 7.49 million new ordinary shares at 280p will enable Ashtead to grow both organically and by a series of small acquisitions. After the rights it will have just under pounds 9m in net cash.

Ashtead's board plans to grow its UK business both by acquisition and organically. It will set up the first site in the Far East in Singapore for Ashtead Technology and continue to expand its US operations based in the south-eastern states.

Peter Lewis, chairman, said: 'As well as seeing further opportunities for organic growth in the UK and overseas, we believe we can now also strengthen our position in the fragmented UK market through selective acquisitions.

''The rights issue will enable us to do this while ensuring Ashtead's continued financial strength.'

Trading has shown an improvement during the five months to September. Turnover - which the management regards as crucial because the business has fixed costs - increased 24 per cent compared with an increase of 10 per cent in the year to April.

In addition, margins are starting to improve as price increases of up to 2 per cent have started to stick this summer.

Mr Lewis is confident about prospects. He is particularly pleased with the economies of scale established in the US, where Ashtead has set up six sites in the past two years.

He believes that capital spending of pounds 32m since May 1990 has left the company in good stead and in a relatively strong position compared with weaker competitors that have trimmed capital expenditure.

The directors are taking up some of their rights, but after the issue their holdings will be reduced from more than 20 per cent to 17.9 per cent.

BZW, the house broker, is forecasting pounds 5.2m pre-tax profit for the 1993-94 financial year compared with pounds 2.76m last year.

The shares rose 1p to 324p.

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