Car dealer Pendragon to raise £75.2m through deeply discounted rights issue

LISTED car dealer Pendragon yesterday said it plans to raise about £75.2m through a rights issue to reduce its debt.

The nine-for-eight issue is to be priced at 10p per new ordinary share, representing an eye-watering 54 per cent discount to the stock’s Wednesday close.

Shares in Pendragon had closed at 21.75p per unit on Wednesday.

Britain’s largest motor retailer also said it had agreed to extend the maturity profile of its borrowing facilities, conditional on the receipt of the proceeds of the rights issue, by its creditors.

The group said its debts now have a maturity date of 30 June 2014, which will enable it to maintain investment in the growth of the business.

The company, which in February said it would not pay full-year dividend as it focuses on reducing debt, now plans to resume dividend payments from financial year 2012.

Meanwhile, Pendragon said it had agreed a new pension deficit reduction plan with its pension trustees, which would help it to unlock aggregate cash flow savings of £46m in the period to December 2014.

As on 31 December 2010, the company’s net debt was £325.5m.

The company, whose Stratstone dealerships sell premium models such as Maserati and Mercedes-Benz, added that trading and outlook for the year is in line with the its expectations.

ADVISERS: ARDEN PARTNERS

STEVE DOUGLAS
ARDEN PARTNERS

STEVE Douglas is leading the Pendragon rights issue for Arden Partners, which is acting as co-bookrunner, joint underwriter and corporate broker.

As corporate finance director, he has a wealth of experience in the sector. He joined Arden in 2004 and was previously at Old Mutual Securities.

Douglas trained as a chartered accountant with Deloitte.

John Deans is leading the rights issue for Rothschild, which is acting as financial adviser and sponsor to Pendragon.

Notable transactions on which he led the Rothschild team include the £2bn Wolseley refinancing, a £750m rights issue for 3i and the £10bn sale of Hanson to HeidelbergCement. Deans is also a governor of Bow Boys School in Tower Hamlets. Francis Burkitt is also working on the deal for Rothschild.

Simon Hardy and Lee Morton are acting for RBS Hoare Govett, with the bank acting as joint financial adviser, sponsor, bookrunner, underwriter and corporate broker on the deal.

Andy Welham and David Seal are acting for Barclays Capital, which is also joint underwriter and bookrunner on the rights issue.