Media group Incepta lifts finances with £26m rights

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The Independent Online

Incepta, the owner of the public relations company Citigate Dewe Rogerson, unveiled plans to raise £25.7m through a rights issue yesterday to shore up its finances to cope with further difficulties for its struggling sector.

Shareholders will be offered one new share for every five held, the company said. The price of 13p a share represents a 14.8 per cent discount to Incepta's closing price of 15.25p on Tuesday.

Richard Nichols, the chief executive of Incepta, said: "The media industry has seen some of the most challenging conditions for some time. There are patches of recovery, but our concern is that the timing and speed of recovery is hard to predict."

Several media companies have shown visible signs of distress recently. The most notable is Cordiant, the PR and marketing business that is facing administration if a bid by Sir Martin Sorrell's WPP does not come off.

Incepta, which also owns a string of marketing services businesses, stressed its move was not a rescue rights issue. Its net debt stands at £90m, but it remains within its loan facilities with its banks.

Mr Nichols said the relatively modest discount of the rights issue to its share price and the fact that several institutions had expressed support for the capital raising put Incepta "in a tangibly different position from Cordiant".

The share sale has been fully underwritten by Collins Stewart and has been supported by employees of Incepta, who control 40 per cent of its shares, as well as by several institutions.

Incepta has already slashed 230 jobs, or 10 per cent of its workforce, and the London-based business has sold 78,000 sq ft of property to save costs.

Incepta said at an operating level it had performed ahead of expectations. Operating margins will remain in the 12 per cent range for 2003, near the same level of the previous year, Mr Nichols said. Net debt is expected to be reduced to between £75m and £80m at the end of the year.

Since May, the company has taken on new clients including the telephones directory business Yell and the Russian oil tycoon Roman Abramovich, who has bought Chelsea Village, the Premiership football club. Incepta's shares fell 0.5p to 14.75p.

Advertising and public relations companies are facing their worst slump in more than a decade as cooling economies are forcing clients to pare spending.