Triplex wants 17m pounds to fund investment

TRIPLEX LLOYD, the Birmingham metal basher, has become the latest company to ask the stock market for money in a rights issue.

Triplex hopes to raise pounds 17.3m to help fund a pounds 20m capital investment programme. In recent times the company's profits have been held back by a troubled building products division. The new money will fund expansion in Triplex's more successful power and automotive products operations.

The company supplies parts for large diameter turbines used in gas-fired power stations. Two- thirds of the rights issue money will be used to develop this side of the business. One-third will be used to expand and improve Triplex's capacity to make car parts.

However, there will be no immediate impact on profits because the new construction will take at least 18 months. Analysts at the stockbroker NatWest Securities actually downgraded the forecast for this and next year because of difficulties in building products.

The rights cash will at first be used to reduce borrowing, which stands at pounds 27m, or 70 per cent as a proportion of net assets.

Triplex will increase debt to fund capital investment over the next two years, but expects to generate enough cash in the meantime to keep gearing below its present level.

The one-for-four rights issue is pitched at 140p. Triplex shares dropped sharply from 173p to 165p in early trading, but recovered to close at 171p.

The company said that it 'remains confident that the group will continue during the year to March 1994 to show the resilience to the recession being demonstrated in the current year'.

It accompanied the upbeat statement with a promise to pay a 4.5p final dividend for the year to 31 March, making 7p in total.