The rights issue, announced a day after the Asda supermarkets group unveiled its pounds 347m call, will pay off some debt and speed the store refurbishment programme.
Burton is offering shareholders one new share at 60p for every four now held. Burton shares fell 21 2 p to 721 2 p yesterday.
More companies with heavy borrowings and a credible management are expected to take advantage of the buoyant stock market and appetite for paper to launch rights.
The issue is fully underwritten by Warburg and is costing pounds 4.5m in underwriting and other fees.
Burton said much remained to be done in its multiples division, which includes the Top Shop, Principles, Dorothy Perkins, Evans and Burton chains.
It plans to spend about pounds 130m on refurbishment over three years.
Initially, however, the cash raised will bring down net debt, which stands at pounds 325m. Gearing will fall to about 19 per cent.
Burton said it expected to pay an interim dividend of 1p this year. While sales have been growing strongly, margins have been squeezed. Burton recently reported a 14 per cent increase in sales but a decline in the gross margin of 2.5 percentage points in the 20 weeks to 21 January.
Reaction to the issue was not as favourable as to the Asda call, but it was still quite sanguine.
John Hoerner, chief executive, said the group had been streamlined after 2,000 redundancies announced this month, adding: 'The next stage is to enhance the benefits of these programmes by improving and updating the shops in a cost-effective manner.'Reuse content