THE balance sheet at bookmaker Ladbrokes is much healthier today after it completed a £275m rights issue.
The company, which has more than 2,000 betting shops in the UK, had sought funds to put it in a stronger position when it came to refinancing its remaining debt.
It had received 95% acceptance from shareholders for its rights issue which it launched earlier this month.
The 300m shares were offered on the basis of one new share for every two shares held at 95p – a discount of 48% on the share price at the time.
The remaining 5% was taken up at 136p through joint bookrunners UBS and Deutsche Bank.
Ladbrokes shares have fallen sharply in the last month, down 36% from 204p in late September to a low of 130p, before they edged higher.
Last night it closed at 134p.
In contrast William Hill’s share price has been much more robust. It fell 16% in the same period, but has recovered about half of this fall.
Its trading update this month was much brighter than its rival. William Hill said its retail division remained on track to meet full-year expectations, helped by reduced costs and higher-than-forecast turnover as successful customers recycled more of their winnings.
Ladbrokes suffered a difficult three months to September 30, as its revenues were affected by factors ranging from the recession to the lack of drawn matches in the Premier League.
Revenues, excluding high rollers, were down 15% but operating profits were down 54%, to £22.4m, after a winning start to the season by heavily-backed Chelsea and Manchester United and the low incidence of draws – the bookies’ favourite result because gamblers prefer to back a team to win.
The tough trading conditions led the company to step up cost-saving efforts, including through a salary freeze until January, 2011, and the withdrawal of its full-year dividend payment to shareholders.
Ladbrokes chief executive Chris Bell, speaking at the time of the rights issue, said: “Ladbrokes continues to be a profitable and cash generative business with strong positions in markets that remain attractive.
“We have been pro-actively managing our balance sheet and liquidity for some time, and we believe it is now prudent to strengthen our financial position and to put in place a more appropriate capital structure.”
