Investor support for Findel’s £80.5m placing

The company, which moved from Burley-in-Wharfedale to Cheshire last year, wants the cash to help fund an ambitious investment programme for its five core businesses and pay down debt.

Findel is raising £80.5m (£75m net) through a five for two rights offering at 6.54p, issuing 1.2m new shares and placing another 5.8m shares.

Of this sum, £40m will be used to pay down debt and some will also be used for growth. If the rights issue, placing and new facilities become available, it believes net debt will fall by £110.5m.

Findel recently warned its high debt levels make the rights issue vital, alongside a planned new five-year £196.8m credit facility and a £105m securitisation facility.

It said in a letter to shareholders: “Without the completion of the rights issue and entry into the new lending facilities, this extreme level of financial risk will remain and there can be no certainty of the continued support of financing banks or the availability of adequate debt facilities beyond the expiry (in 2012).”

However, Findel said the rights issue is still conditional on an underwriting agreement.

Earlier this month, Findel said sales for the 17 weeks to January 28 were slightly behind last year as bad weather hit some of its operations.

The company said it had seen a significant hit following the closure of up to 25 per cent of UK schools for a fortnight in December.

The group said that its education supplies division had been heavily impacted by snow. Sales in the 17 weeks to January were down 11 per cent.

Findel said the profit impact of this sales decline was mitigated by the fact that December is traditionally one of its slower months.

The home shopping businesses saw a 1.7 per cent fall in sales during the 17-week period.

Findel said that in the short term it continues to face a number of challenges.