The company also warned that trading conditions so far in the financial year to April continue to be tough. Some analysts said they might have to reduce previous pre- tax profit expectations of pounds 8.5m for 1993/94 by as much as 10 per cent.
Budgens' assault on the discounting market started in August and was inspired by Rewe-Zentralfianz of Germany, one of Europe's largest food retailers, which has built up a 29.35 per cent stake in Budgens since April.
Seven existing Budgens stores have already been converted to the discount format, and another three will open by Christmas.
John von Spreckelsen, chief executive of Budgens, said the pilot store conversions that started in Cambridge had 'left us cautiously optimistic'.
Penny Market stores have average retail space of 7,000 square feet and carry about 1,300 lines. 'It is a good range for everyday needs, including fruit and vegetables,' he said.
Shoppers, however, will forgo the luxury of delicatessen and fresh meat service counters.
'They will get a better deal on ordinary groceries. Penny Markets are operated as low-cost centres, and everything is pre-packaged,' Mr von Spreckelsen said.
He added that the cash call - pounds 29.7m after expenses - would cover the opening of 30 stores, which will each have 7,000 square feet of retail space to sell 1,300 lines.
The company is confident that it can obtain sites, which have to be around 1.5 acres, in heavily populated areas in the South.
Rewe has underwritten the open offer and subscription of 5 per cent, 10-year convertible unsecured loan stock. If all shareholders boycotted the rights, then Rewe could end up with 47 per cent of Budgens on conversion of the stock.
The offer is on the basis of pounds 1 of stock for every 5.424 ordinary shares. Conversion, which can begin in 1995, is at the rate of 1.818 ordinary shares per pounds 1 of stock, representing a conversion price of 55p. Budgens shares closed at 44p, up 1p.
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