Oriel also said that it plans initially to spend pounds 8.7m to buy Warranty Holdings Group, which sells mechanical breakdown warranties for cars. Warranty made a pre-tax profit of only pounds 183,000 last year, though this was after deducting pounds 1m of non-recurring items, which included the salaries of departing directors.
Oriel is issuing 3.5 million shares at 100p, 22p above yesterday's opening price on the Unlisted Securities Market. Some 1.8 million will be available to existing shareholders through a one-for-eight open offer, but those not bought will be taken up by Onic, the leading insurer in Oman.
Nigel Cayzer, Oriel's chairman, said Onic was prepared to pay above the market price because it wanted to take a 20 per cent stake. Onic would inevitably have pushed Oriel's price higher if it had bought in the market.
Mr Cayzer said no previous business relationship existed between Oriel and Onic but that Onic was keen to find a UK partner.
Oriel is paying a combination of cash and shares to Warranty's vendors. Warranty's Peter Head and David Latimer could receive a further pounds 5.9m depending on profits over the next three years.
Oriel blamed its reverse from an operating profit of pounds 2.5m in 1991 on an absence of income from insurance training at Neil Lewis & Associates, and a severe retraction in the entertainment business handled by Hayward, a specialist broker.
Oriel is paying a final dividend of 3p, to leave the total unchanged at 5p a share.Reuse content