Beazley, the Lloyd's of London insurer, announced a £105m rights issue yesterday, shoring up its regulatory capital position, and raising the necessary funds to buy and capitalise the property and casualty business of Omaha Insurance Company.
The move, which will see four new shares issued for every seven existing ones, will increase the company's market value to more than £300m. The new shares are to be offered at 84p, representing an 8 per cent discount to last week's closing price of 91.5p.
About £12m of the raised capital will be used to make its new acquisition, with a further £22m to be spent on capitalising the business. The remainder will be used to increase the group's participation in its two underwriting syndicates.
The group, which floated on the London market two years ago, also revealed that as well as planning to pay a 1p full-year dividend for 2004, it will commit to a dividend of not less than 4p for 2005.
Andrew Beazley, the Beazley chief executive, said: "The proposed rights issue allows Beazley to benefit immediately from the increased share we have obtained for 2005 in the group's continuing underwriting activities at Lloyd's and secures the group's capital requirements for the foreseeable future."
An extraordinary meeting to secure shareholders' approval for the rights issue will be held on 17 November. Shares in the group remained unchanged yesterday at 91.5p.Reuse content