Sir Richard Branson's retailer Victory Corporation yesterday raised £10.4m to plug a hole in its balance sheet and help fund an expansion drive for its Virgin Cosmetics brand.
The move, which was accompanied by a 100-for-1 share consolidation, saw Virgin's shareholding in the AIM-listed Victory increase to 89 per cent from 83 per cent.
Just over a third of the open offer, which was underwritten by Sir Richard's Virgin Retail Investment Holdings, was taken up by shareholders outside the Virgin group. There is no minimum free float for companies listed on AIM.
John Jackson, Victory's chairman, said the funds raised would be used to pay off an existing £10.13m loan drawn down from another part of the Branson empire. "The improvement in our balance sheet is important in order to underpin the company's working capital position as growth continues to be strong," he said.
Richard Ratner, the company's house broker at Seymour Pierce, said the exercise was not a veiled attempt to privatise Victory. "Fundamentally, it is a very good business, which is why [Sir Richard] wants shareholders to participate in the upside," he said.
Mr Jackson said sales for the first three months of the year through Victory's direct channel rose by 36 per cent, while like-for-like sales across its 22 retail stores had increased by 11.7 per cent.
In a note to investors, Seymour Pierce said it expected Victory to make a pre-tax profit of £3m for the year to 31 March 2004, against losses of £7.9m in its last financial year.
The company, which floated at 58p a share in 1996, sold its loss-making retail clothing business in April. Its plans centre on turning Virgin Cosmetics into an international brand and developing its Virgin Clothing business.Reuse content