Avis Europe in £110m cash call to fund fleet

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The Independent Online

Avis Europe called on shareholders for £110m yesterday through a deeply discounted rights issue to fund its recovery plan, as it reported that trading conditions remained difficult.

Avis Europe called on shareholders for £110m yesterday through a deeply discounted rights issue to fund its recovery plan, as it reported that trading conditions remained difficult.

The troubled car hire group said it needed the money to expand its fleet and strengthen its balance sheet. The money will be deployed alongside the two other elements of the Avis recovery plan put in place by the chief executive Murray Hennessy. The other parts of the strategy are a "rigorous" cost-reduction programme and enhanced customer service.

Mr Hennessy said about half the new money would be used to buy cars, to target the parts of the market that show the best potential for growth. The rest will go to boost the balance sheet.

Avis shares dropped 5 per cent to 59.75p, valuing the company at £350m. By comparison, net debt is expected to reach € 1.4bn (£938m) in July. The company is raising the new cash through a 4 for 7 rights issue at 35p, a 44 per cent discount to the closing price on Wednesday.

Avis's biggest shareholder, the Belgian group D'Ieteren, has agreed to take £70m of the new shares, while the issue is underwritten by the broker Dresdner Kleinwort Wasserstein.

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