Poor take-up for BET rights issue
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Your support makes all the difference.LESS than half of BET's shareholders took up their shares in its pounds 200.7m rights issue. But the company said it was 'reasonably satisfied' in view of market conditions.
Barclays de Zoete Wedd and Cazenove, joint brokers to the issue, placed 20 million shares at 107.5p but said that sub-underwriters for the remaining 86 million shares were happy to retain them. The price was set to ensure no loss to the sub-underwriters, after allowing for underwriting commission.
BET's shares closed unchanged at the rights price of 110p, having dipped to 109p at one stage. When the one-for-four issue was announced, they were 133p.
A spokesman for BET said the conclusion of the issue marked 'another step in the transformation of BET from a holding company into the operating company which we want it to be, and gives us a sounder financial platform to continue the process'.
It will use the funds to redeem dollars 380m (pounds 199m) of its dollars 500m auction market preferred stock, which it says represented too high a proportion - 72 per cent - of its shareholders' funds. The dividend rates on the stock were also becoming more expensive relative to other forms of borrowing.
That the issue was hailed as a success, despite the poor take-up, underlines the poor conditions in the stock market. Burnfield, the engineering group, was similarly hit with only 40.3 per cent of its pounds 24.2m rights issue taken up.
Advisers to the issues attributed the low level of acceptances partly to the fact that many of the sub-underwriters are also shareholders. They are reluctant to take up their full entitlement as shareholders as they risk being left with more shares if other investors do not subscribe.
There have been few rights issues this year: only pounds 1.6bn has been raised compared with pounds 6.1bn in the first seven months of 1991.
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