GKN, the car parts giant, launched a £423m rights issue yesterday to avoid costly refinancing and enable it to take over business from struggling rivals.
The company has been hit hard by the sharp downturn in the global automotive industry and is to shed another 900 jobs, none of which are in the UK. In 2008, GKN lost 3,500 staff, and another 2,700 have left so far this year.
The rights issue will offer six shares for five at 50p each, a 58 per cent discount to the closing price the previous day.
With equity now cheaper than debt, the proceeds will be used in place of a credit facility due to expire in 2010. The group has £928m-worth of debt. Sir Kevin Smith, the chief executive, said: "Clearly the recession has got hold of the automotive market in particular. Our customers are concerned about continuity of supply and this rights issue clearly positions us even more strongly. This gives us much more opportunity to be aggressive in going after new business."
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