City expectations had been for a two-for-one rights at around pounds 1. But the rapidly softening appetite of investors for share issues has meant a scaling back and the shares dropped 8.5p to 90.5p.
Nick Hodges, the company's chief executive, put a brave face on it yesterday. 'At least we didn't have to pull ours,' he said.
The rights issue, which has been underwritten by SG Warburg, will raise pounds 115m. It is needed to reconstruct LIG's battered balance sheet, where net assets have been wiped out by its disastrous diversification into its now-sold ColourCare photo processing business.
It is accompanied by pounds 114.5m of unsecured borrowing facilities and revised terms on dollars 50m ( pounds 34m) of existing unsecured loan notes.
LIG's full-year figures show the extent of the damage caused by ColourCare, and, to a lesser extent, trading problems in its core condoms and gloves businesses.
Sales of pounds 396.6m ( pounds 416m) in the year ended March generated operating profits of pounds 7.5m ( pounds 47.5m) including a pounds 13.2m loss from photoprocessing ( pounds 3.9m loss).
But the company had to make a pounds 168.3m exceptional charge ( pounds 4.7m), of which pounds 91.4m reflected provisions on the disposal of substantially all of the ColourCare business to its management. That reduced shareholders' funds to a deficit of pounds 10.5m, while net borrowings soared to pounds 168.4m.
After the restructuring the company will have net assets of pounds 104.5m and net borrowings of pounds 82.1m giving a gearing of 78 per cent. It hopes to return to profits this year.
LIG's new management has refocused the business, and will concentrate on developing its core Durex condoms and its state-of- the-art surgical gloves. Non-core businesses are being progressively disposed of and the company has embarked on a massive transfer of manufacturing capacity to cheaper facilities in the Far East.
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