International car retailer Inchcape is to ask its shareholders for £232 million in an effort to shore up its balance sheet.
Inchcape, which has more than 100 retail centres in the UK and sells marques including Audi, BMW and Mercedes-Benz, is offering new shares at an 88% discount to the company’s share price.
It said the rights issue proceeds would be used to reduce debt – £408 million at the end of last year – and delay the need to refinance existing bank facilities until the end of 2012. The company has already responded to the slump in the car industry by cutting 2,000 jobs and introducing a salary freeze.
Inchcape, which has reduced its like-for-like costs by 12%, also announced a 19% fall in pre-tax profits to £190.7 million, although including exceptional items the figure more than halved to £108.2 million.
The company said it was braced for trading conditions to remain extremely challenging throughout 2009, with a “very weak performance” likely in the first half of the year.
It added: “The board expects that new car sales will continue to decline further in 2009 and will not begin to recover until the second half of 2010.”
Source: Press Association