Proudfoot asks for lay-off cash

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ALEXANDER Proudfoot, the management consultancy chaired by Lord Stevens, has called on shareholders for pounds 10m to pay for a redundancy programme.

Proudfoot has suffered badly from recession in developed world economies. Results published yesterday showed that the business made a bottom-line loss of pounds 17.4m for the year to 31 December, against a profit last time of pounds 3.4m.

To combat the fall in demand for its services Proudfoot has cut workforce numbers by 35 per cent. The redundancies will cost about pounds 7m and use funds garnered by the two-for-seven rights issue.

Proudfoot's negative reserves of pounds 24m will also be repaired in part by the cash call.

However, some stockbrokers' analysts questioned the company's financing strategy - particularly because Proudfoot accompanied the money-raising with a promise to shareholders to pay a dividend.

Doubts circulated about the wisdom of asking shareholders for money in a rights issue that would allow the company to return it in dividends. The cash call is pitched at 60p a share. In the market shares rose 3p to 71p.

Operating profits in continuing businesses for the year under review fell from pounds 25.7m to pounds 9.2m.