The money will reduce the company's borrowings from pounds 309m, as reported at the end of last year, cutting them as a proportion of shareholders' funds from 185 to 34 per cent.
The company said the extra cash would help to fund acquisitions. 'Over the next 12 to 15 months we could spend pounds 100m or more if suitable acquisitions arise,' said Graham Wilson, managing director. There were several opportunities for expansion through acquisition but no sign of an upturn in trading.
The company said it had received a number of inquiries from potential purchasers about Extel Financial but none were under active consideration. Mr Wilson said that contrary to rumours in the media and the City, the Lloyds - Sir Nicholas, editor of the Daily Express and his wife, Eve Pollard, editor of the Sunday Express - had not approached the company about an Express buyout.
Advisers to the company said it would have had to make one or two disposals if it wanted to continue with acquisitions without the rights issue. But Mr Wilson said there had been no need for disposals.
He said interest cover - the number of times operating profits cover interest charges - was 5.5 times. 'I am not sure we would want to see it lower,' he added.
The company is raising pounds 190m by issuing one for five shares at 480p, an 18 per cent discount to yesterday's opening price. Mr Wilson said he was very pleased with the level of the discount.
Unlike recent rights issues - notably British Airways' pounds 480m - advisers did not pre-market the cash call but launched it yesterday morning without sounding out large shareholders first. The aim was to avoid the price falling ahead of the issue as word got round the market.
Lord Stevens, the chairman, will be taking up his rights alongside other executive directors. He recently stood down as chairman of Invesco MIM, the fund management firm fined a record pounds 750,000 by City regulators. Under United's normal retirement rules, he is not due to step down until 2001.
The shares have outperformed the rest of the market by 18 per cent in the past year but have lagged behind by 7 per cent over five years.Reuse content