British Polythene in 20.6m pounds rights issue

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The Independent Online
BRITISH Polythene Industries, which made 3 billion carrier bags last year, has become the latest company to ask the stock market for money in a rights issue.

BPI, Britain's largest polythene producer, wants pounds 20.6m to fund its aggressive acquisition strategy. It has bought half a dozen companies in the last 18 months and yesterday added Sonoco Polysack to its collection. It has now spent pounds 36m since September 1991.

Sonoco Polysack, which cost pounds 8.4m, produces plastic packaging for use mainly by supermarkets. It had sales of pounds 12.4m and lost pounds 1.5m in 1992.

The rights cash will be used to reduce BPI's debt. BPI started the week with borrowings of pounds 20.2m, equivalent to 36 per cent of net assets. After the rights - which is underwritten by the merchant bank Charterhouse - and the Sonoco purchase BPI will have debt of about pounds 12m. Cameron McLatchie, chairman, said he would be happy to see gearing at 50 per cent, indicating that the company may double borrowings.

The shares fell 4p to 484p. The one-for-six rights is pitched at 405p, a 16 per cent discount to yesterday's closing price.

BPI raised pounds 15.4m in a rights issue in September 1991. Since then, the shares have risen 33 per cent in absolute terms, and have outperformed the FT All-Share index by 20 per cent.

BPI also published pre-tax profits yesterday of pounds 12m for the year to 31 December, up from pounds 10.2m. Fully diluted earnings per share rose 8 per cent to 25.8p. The total dividend is 10p, up 11 per cent.