Travis to make £300m cash call this week

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Travis Perkins, the listed builders merchant with a turnover of £3.2bn and owner of the Wickes DIY chain, will ask investors for at least £300m this week when it announces plans for a rights issue. A chunk of the money raised will help pay off debt that stood at more than £1bn at the end of last year.

The construction, property and building supply sectors have been devastated by the credit crunch. Sources confirmed speculation that Redrow, the quoted housebuilder, is also considering a rights issue to help it recover from the market collapse.

HSBC, Travis Perkins's adviser, is understood to be one of the lead arrangers of the fundraising. Citigroup is thought to be another. A market source said: "There seems to be a lot of demand among shareholders for this rights issue and there has been for some time."

Travis Perkins would not confirm the move, but said in a statement after the market closed on Friday: "In its preliminary statement of full year results announced on 19 February, the company stated that it was closely monitoring trading trends, and continuously updating plans for, and evaluation of, options for protecting the group's capital position.

"Any decision by the board will be communicated to shareholders as and when appropriate."

Those results showed that though 2008 revenue was flat on the previous year, pre-tax profit slumped 44 per cent to less than £150m.

Redrow founder Steve Morgan, who returned to the company with huge investor backing in mid-March, is weighing up tackling its £269m debt with a capital raising. A source close to the board said: "A rights issue is a consideration. Redrow is conscious that the window of opportunity [goodwill towards the revamped management team] is now. It is a work in progress."

A decision over a rights issue will be made over the next two months, before the City enters its mid-summer lull, the source added. "The company is well within its banking covenants [terms of its loans] so a rights issue is not a slam dunk definite. No decision has been made."

Mr Morgan, who is also chairman of the newly promoted Wolverhampton Football Club, rejoined as deputy chairman. However, he will formally take charge of the Ftse250 company at the end of June, as executive chairman. Travis Perkins closed at 753.5p a share on Friday, down 29.5p on the start of trading. Redrow fell 0.25p to 197p.

Heavily indebted rival Taylor Wimpey announced plans on Friday to raise £510m from the market.

In other property news, Heron International, the pan-European developer run by Gerald Ronson, and the Co-operative Insurance Society have held a "topping out" ceremony for The Peak office scheme opposite London's Victoria station. Cash rich Heron is eyeing up property investment opportunities of around £50m and above.

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