Regus escapes Chapter 11 but Bonnier rules out bid

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The Independent Online

Robert Bonnier, the dot.com entrepreneur who has been circling the troubled serviced office provider Regus, yesterday said he had sold his stake and he was no longer interested in making a bid.

The news came as Regus emerged from bankruptcy protection in the US and announced plans to raise £55m to revitalise the group's finances.

Mr Bonnier's investment vehicle, Indigo Capital, had expressed an interest in rescuing the company earlier this year, but yesterday said that "after careful consideration", it no longer had intentions towards Regus.

The Financial Services Authority, however, is still investigating Mr Bonnier and his trades in Regus shares after it became known that Indigo sold shares only days after announcing an interest in making a bid. Indigo received a ticking-off from the Takeover Panel and the regulator is still trying to establish whether a "false or misleading" impression was created about the value of Regus shares.

Mark Dixon, the chief executive of Regus, however, was yesterday focused on its future, and announced plans to raise £55m through a rights issue. Investors will be offered the rights to one new share for every three shares they own at 28p, an 18 per cent discount to its closing price on Wednesday. Shares soared nearly 25 per cent to close at 42.75p.

Regus got into difficulties in the US after over-expanding, particularly on the West Coast to exploit the boom in technology companies based there. But the collapse of the dot.com phenomenon saw many companies go bust or drastically cut jobs. This left Regus with hefty long-term leases on buildings that became empty. It was forced into Chapter 11 bankruptcy. Mr Dixon yesterday said £28m of the money raised in the rights issue would be used to pay off the company's creditors in full.

"We made one mistake, and that was being caught out in the aftermath of the technology bubble. We have used the Chapter 11 procedures very carefully and we have only closed four centres in the US. This means we can still participate when things pick up," Mr Dixon said.

Mr Dixon has foregone the rights that his 62 per cent shareholding in Regus give him, which have been sold on to institutional shareholders. His stake was once worth £1.4bn, but this has shrunk to about £125m. His holding will be diluted to 47 per cent and 28 new institutional shareholders have come on board. KBC Peel Hunt has fully underwritten the rights issue.

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