Michael Frye, chief executive, said the fund-raising exercise would finance the retention of Philidas and Newall, two subsidiaries it had planned to sell, and the pounds 771,500 acquisition of Deeming Taylor, a manufacturer of specialist dyes and tooling products.
After the rights issue, the company - which had a pounds 28m refinancing in December last year - will see gearing of about 300 per cent fall to less than 100 per cent.
Mr Frye said the board had never wanted to sell Philidas but had felt it would be necessary to reduce debt. It decided to keep Newall after a review of operations suggested that extended engine life would boost the engine overhaul business.
Some 9.1 million new ordinary shares will be issued at 63p. Shareholders are eligible for one new ordinary share for every three ordinary shares already held and every 2.13 preference shares at 7.5 per cent.
The return to profit at the pre-tax level for the six months to 1 October follows last year's restructuring. Pre-tax profits of pounds 1.26m compared with a loss of pounds 760,000. Turnover in continuing operations increased to pounds 40.7m from pounds 35.2m.
Financing costs have fallen from pounds 2.65m to pounds 714,000.
Trading conditions have stabilised, although many of the company's key markets remain depressed. As for the future, Mr Frye does not anticipate a significant recovery in demand but says he believes Elliott will turn in a 'satisfactory' performance in the second half.
Earnings per share were 3.42p compared with a loss per share of 57.44p. There is no interim dividend and the Elliott board will decide whether to pay out a final dividend in the light of the year-end results.Reuse content