The group is asking shareholders for pounds 104m to expand its housing and minerals businesses. Joe Dwyer, chief executive, said: 'We have to turn our attention from debt reduction to financing the recovery. To do it on our own would be difficult.'
The rights issue comes just three months after Grove Charity Management, the trust set up by Wimpey's founder more than 30 years ago, reduced its stake from 34 to 5 per cent. Mr Dwyer said the stake had not been a bar to a rights issue although he admitted that, because Grove would not have taken up its entitlement, it would have made it more difficult.
The group's borrowings at the end of 1992 stood at pounds 136m, or 30 per cent of net assets - the lowest gearing level for 10 years - although they have since risen to pounds 159m, largely because of the higher working capital traditionally required in the spring. The rights issue will cut that to about 10 per cent, although Mr Dwyer said the group intended to re-invest the rights money 'and more' in expanding the business.
The one-for-four rights issue is priced at 148p a share, a 21 per cent discount to yesterday's opening price. It was well received in the City and Wimpey's shares, which have outperformed the market by 30 per cent since the Grove sale, closed just 3p lower at 184p.
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