Cookson makes call for £193m

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BY TOM STEVENSON

Deputy City Editor

Cookson, the industrial materials group, launched its third rights issue in three years yesterday, raising £193m to fund one acquisition that is already in the bag and two potential purchases.

Richard Oster, Cookson's chief executive, sold the cash-raising to investors on the back of a 27 per cent rise in operating profits to £140.3m, almost three times the £50m achieved in 1991.

At the time, Cookson was recovering from an acquisition spree in the late 1980s, which had left the company with high debts, low margins and poor cash flow.

Cookson will use the proceeds of the one-for-five issue at 175p a share to buy Tolaram, an American manufacturer of specialist fine denier fibres used mainly in clothing manufacturing. Tolaram will be merged with Camac, Cookson's fibres business, which specialises in heavier yarns for carpets and upholstery.

Cookson said that two other complementary deals were at an advanced stage of negotiation.

Mr Oster said the acquisition of Tolaram was part of an ongoing process of buying high-margin growth companies and shedding Cookson's older low- margin activities. He said that 75 per cent of the group's subsidiaries had been acquired since 1985.

Since 1990, Cookson has been restructured as a specialist industrial materials group focused on relatively high-technology products.

Investment has run at almost twice the rate of depreciation in on-going businesses while other companies worth £97m have been sold.

The cost of existing non-core businesses was evident during the year in an exceptional £61.2m charge, mainly to cover goodwill written off after the sale of the lead, aluminium, castings and magnets businesses to Calder Group.

That reduced pre-tax profits from 1993's £118.4m to £70.9m and reduced earnings per share from 12.1p to 2.6p.

Underlying earnings rose from 11p to 14.8p, allowing the payment of a final dividend of 3.8p to give a full-year payout of 7p, up 11 per cent.

Mr Oster said Cookson was on target to meet the company's growth targets.

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