Andy Taylor, the executive chairman, said he hoped the share issue would represent the final chapter of a catastrophic period for the company, which has seen its shares collapse from above 45p at the start of 2005.
Mr Taylor warned that without the restructuring, Sanctuary would run out of money before the end of the month. The net proceeds of the share issue will be used to reduce the company's £177m of debt, which includes credit facilities at Bank of Scotland totalling about £147m and a further £30m owed to bondholders.
About £96m of the money will go to Bank of Scotland, which has also agreed to write off £17m of the company's debt in return for new shares in Sanctuary. The bank will restrict Sanctuary's borrowing to £65m. Sanctuary will pay £4.7m to its bondholders, who have also accepted shares in the company in return for an £18m debt write-off.
Mr Taylor said: "This will help put a line under the events of 2005 and allow the company to move forward."
Most of Sanctuary's problems were caused by its purchase of Urban Records, bought from Matthew Knowles, Beyoncé's father. Sanctuary said last week no more records would be released under the Urban label, where serious problems last year contributed to a total group loss of £143m.
As part of the restructuring deal, existing shareholders will get eight new shares for every 75 they hold - the new stock will initially be listed at 50p. The share issue, which is subject to shareholder approval, will leave existing investors owning less than 1 per cent of Sanctuary unless they subscribe to the new shares.
Mr Taylor claimed the group's long-term strategy would enable it to recover. Sanctuary will focus on core business areas such as its record labels, while talks are continuing over the disposal of assets such at its studios business. The disposals could raise £5m this year, Sanctuary said. It also expects to save up to £15m after a programme of job losses last year that has cut its global staff by 25 per cent.Reuse content