Although the issue was widely expected, the timing took the City by surprise. Most analysts had expected it to wait until Ron Spinney, who took over as chief executive at the beginning of the month, and Geoffrey Maitland Smith, who succeeds the veteran chairman Sydney Mason next month, had conducted a review of the business.
But property shares have performed strongly in recent weeks on signs of a rise in the price of some office and retail properties. That has already prompted companies such as Land Securities and Brixton Estates to raise funds. Hammerson's rights brings the total raised to pounds 620m.
Mr Spinney, whose arrival coincided with a 44 per cent fall in profits, a 30 per cent fall in asset value and a 40 per cent cut in the dividend, has already embarked on a strategic review of the business, covering its property portfolio and its management structure. 'We believe there are cultural changes to introduce to the company,' he said. 'One of the advantages I bring is that I am in no way committed to any of the existing buildings. There are no sacred cows.'
The review will consider the geographic spread of the portfolio and the types of buildings it invests in. Hammerson is unusual in having a small number of large buildings in its portfolio - about 50 in all, substantially fewer than its rivals.
Mr Spinney said the review was likely to lead to a 'rebalancing' of the portfolio. Some buildings were likely to be sold, although he would not necessarily stick to the pounds 100m target set by the old management. New investment was likely initially to be on expanding and improving the existing portfolio rather than buying new buildings.
He also aimed to make 'significant' savings in administration costs, which were pounds 17.6m last year. 'Part of the aim is to ensure we have an open system in the company, so that everyone can contribute to the team.'
The seven-for-15 rights issue is priced at 285p for each ordinary share and 255p for the restricted-voting 'A' shares. The group also announced that it intended to merge the two types of shares into one new class later this year. Standard Life, which owns 23.6 per cent of the company, is to take up its rights entitlement.
It is forecasting a maintained dividend of 10p. But the rights issue would have diluted its asset value in 1992 from 445p to 385p.
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