Shareholders back cash call at Ladbrokes
BOOKMAKER Ladbrokes yesterday announced its shareholders have agreed to buy more than 95 per cent of the shares offered in its underwritten £275m cash call.
Ladbrokes, which runs 2,700 betting shops, unveiled a surprise rights issue earlier this month to pay down debt after revealing revenue had dived by 15 per cent in its third quarter due to “exceptionally low” margins on Premier League football bets.
Of the 96 games played so far in Britain’s top flight division only 15 have been draws, which has meant bad news for bookies as most punters gamble on a win.
The betting firm, which has already said it is withholding interim payments to shareholders, said the one-for-two rights issue of 3bn shares priced at 95p per share – at a 48 per cent discount to the market price – would reinforce its balance sheet.
Net debt stood at £962m at 30 June, but this will fall to around £687m after it refinances its remaining debt and reinforces its balance sheet with the extra funds raised.
Ladbrokes chief executive Chris Bell said that the rights issue was vital, as the group’s cost cutting efforts were not enough on their own to remove the risk of the debt pile.
Ladbrokes has been suffering more than its rival William Hill during the downturn. William Hill last week reported it would meet City expectations, despite a poor football season. The group reported a smaller seven per cent drop in revenues.
Panmure Gordon analysts said: “Ladbrokes’ recently announced rights issue should bring capital ratios into line with the peer group but operational challenges remain.”
LADBROKES ADVISERS
BETTING firm Ladbrokes enlisted its long-term advisers UBS and Deutsche Bank to run the rights issue. Head of UK investment banking Tim Waddell led the UBS team along with colleague Bill Hutchings.
Wadell has been working at UBS’s broking division for the past twenty-four years. Hutchings joined the bank in 2000.
Wadell is also currently working on advising Cadbury, which is at the centre of a bid from US rival Kraft.
Deutsche Bank’s head of broking Charles Wilkinson and head of European equities syndicate Edward Sankey were also on the deal.
In addition to Ladbrokes, the broking team has also advised TUI Travel and Drax (for a convertible bond and equity placing respectively).
Boutique broker Greenhill is also acting as financial adviser. UBS Investment Bank and Deutsche Bank is acting as joint sponsors, joint bookrunners and underwriters.
Barclays Bank, Lloyds TSB Corporate Markets and RBS Hoare Govett are acting as co-lead managers and underwriters.
Ladbroke is paying £10.6m in fees.