A return to the dividend list is expected to sweeten the pill for investors whose shares are trading at less than half their value eight years ago.
The cash call is being staged to raise pounds 3m the company needs to expand its chain of 29 leather furniture outlets by half. Of 14 planned openings, four are in solicitors' hands, with another four subject to detailed negotiations.
The issue will dilute the holding of the founding Bernadout brothers, who own about 60 per cent of the shares.
World of Leather, the market leader with 20 per cent of the leather furniture market, came to the unlisted securities market in 1985. Since 1989, when it bought out a competitor, it has struggled to finance debts of about pounds 3m.
Last year it was also hit by the costs of a legal wrangle with a distribution company. The pounds 406,000 cost of a settlement contributed to losses of pounds 121,000 in 1993. In the previous four years there was an aggregate loss of pounds 750,000.
This year brokers expect profits of up to pounds 800,000. Leather furniture now accounts for about a fifth of all UK sofa sales compared with 3 per cent in 1980.
In some European countries the proportion is up to 55 per cent and World of Leather says the sale of one extra three-piece suite per shop per week adds pounds 1m to profits.
The shares, which reached 215p in 1986, fell as low as 15p in 1991 before recovering to their current 97p.
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