Pizza team leads pounds 1.8m rescue of Cupid

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CUPID, the troubled wedding and formalwear manufacturer, has been saved by a pounds 1.8m rescue package assembled by Luke Johnson and Hugh Osmond, the team behind Pizza Express, writes Heather Connon.

The two men, with Stephen Hargrave and Midocean - an existing shareholder - have agreed to subscribe for 16.1 million new shares at 3p and have arranged a three-for-two rights issue, at the same price, to raise pounds 1.5m. National Westminster has agreed to convert a pounds 750,000 loan into shares. The shares closed up 6p at 21p.

The rights issue is the third since June 1992. The most recent, a year ago, was aimed at financing a rationalisation programme. But the group said yesterday that sales had fallen 'significantly short of expectations' and warned that without the rights, it would not be able to continue trading.

Borrowings are pounds 3.5m and net assets are likely to have fallen below the pounds 1.8m issued share capital. Losses in the year to March are expected to be double last year's pounds 1.5m.

Mr Johnson, who will become a non-executive director, said the intention was to return the group to profits. Quilty, the loss-making nursery business, has been sold and a new range, designed by Jeff Banks, will soon be introduced to Pronuptia and Youngs.

He added that the large discount of the rights price to Cupid's share price reflected the fact that Cupid had a 'terrible track record'. But, as market leader with pounds 12m of sales and 60 shops, it should be possible to make it profitable.