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Grainger asks for more cash

GRAINGER joined its property peers yesterday by announcing it will raise &pound;250m in a rights issue to boost its ability to snap up acquisition opportunities.<br /><br />The group, which said it had swung to a &pound;3m pre-tax loss in the year to 30 September, compared to &pound;12m profits the year before, said it will issue 277m new shares in a two-for-one rights issue priced at 90p per share &ndash; a 66.8 per cent discount to Wednesdays closing price.<br /><br />The group&rsquo;s current net debt stands at &pound;1.56bn &ndash; but Grainger said that &pound;104.5m of the net proceeds of the rights issue will be used to prepay and cancel debt. Of the balance of &pound;133.4m, &pound;68.5m will be used to reduce (but not cancel) debt until acquisition opportunities arise.<br /><br />The &pound;173m reduction of debt will reduce its net debt to &pound;1.32bn &ndash; and provide sufficient headroom on its banking facilities to make acquisitions.<br /><br />Last month Grainger struck a deal with a consortium of banks over its lending facilities. The new agreement will see the&nbsp; property landlord not having to pay off &pound;900m of maturing debt until 2011.<br /><br />Chief executive Andrew Cunningham, who took the role last month after former boss Rupert Dickinson stepped down due to ill health, said:&nbsp; &ldquo;This strengthened financial position will ensure the group is well placed to use its market-leading position in the residential market to make compelling acquisitions which should enhance shareholder value over time.&rdquo;<br /><br /><br /><strong>ALEX MIDGEN ROTHSCHILD <br />ADVISER TO GRAINGER<br /></strong>GRAINGER appointed Rothschild and JP Morgan Cazenove to work as advisers on its &pound;250m rights issue. <br /><br />JP Morgan Cazenove&rsquo;s team was led by head of real estate corporate finance Robert Fowlds, along with Jonathan Wilcox and Bronson Albery. <br /><br />Rothschild used managing director Nigel Himsworth , assistant director Paul Mitchell and property star Alex Midgen.<br /><br />Midgen, a former surveyor at DTZ, joined Rothschild in 1994. Midgen&rsquo;s breakthrough came after a critical mass of high-profile deals including advising diamond magnate Simon Glick&rsquo;s bid for Canary Wharf and Guy Hands on his consortium's &euro;7bn bid for Viterra. Midgen now sits on the board of Songbird as a non-executive director. Midgen has made a name for himself as the antithesis of many brash investment bankers.