Sidlaw's shares hit by pounds 24m cash call

OIL SERVICES and packaging group Sidlaw is raising pounds 23.7m, by way of a 1-for-4 rights issue, despite a 37 per cent fall in its share price since May.

Digby Morrow, chief executive, said the proceeds would be used to invest in the food cartons business it bought last year from Courtaulds for pounds 79m. The shares, which have already fallen from a high of 358p in May, closed a further 16p lower at 209p, their lowest level for three years.

When Sidlaw acquired the Courtaulds business in July 1993, it tapped shareholders for pounds 53m at 275p a share. Yesterday's cash call was pitched at 180p.

At the time of the acquisition, a pounds 5m provision was taken to cover restructuring costs. Yesterday, a further pounds 6.3m was taken against new reorganisation expenses, although the company said it had flagged possible further provisions at the time.

The company had to raise the money through the stock market, even at the currently depressed share price, because of relatively high gearing which reached 70 per cent of shareholders' funds at the half-year.

Mr Morrow said that profits before tax in the year to September would be not less than pounds 14.5m ( pounds 11.1m in 1993). He confirmed there would be a fall in earnings per share from 20.3p to 20p.

Sidlaw plans to spend pounds 32m over the next two years upgrading its facilities across Europe.

Sidlaw also announced yesterday that it was putting its textiles division up for sale. Although profitable, and expected to benefit from rising carpet sales, the division generated less than 5 per cent of group profits last year.