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Marstons - Launches 11:10 rights issue

July 2009

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • MARS
  • Price:
  • 117p
Marstons' first half results, which showed a 21% reduction in pretax profit to £27.7m on turnover that fell 2.8% to £307.5m, were overshadowed by its subsequent decision to launch a rights issue, nearly twice as dilutive as the one issued by rival Greene King two months earlier. Marstons is to raise £176m through a fully underwritten 11-for-10 rights issue at a deeply discounted price of 59p, which will increase the number of shares in issue by 298.9m or 110%. There is a whiff of over-kill here given its existing borrowing head-room of c. £100m and the decision to hold its interim dividend, which drained £13m. That said, some analysts had still been expecting it to use the proceeds to pay down its £1.3bn. net debt but instea ...

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