Ladbrokes launches 275m cash call in a bid to relieve debt as revenues fall

LADBROKES, the book maker, yesterday announced a fully underwritten &pound;275m cash call to pay down its debt, as it revealed its revenue had fallen by 15 per cent in the third quarter due to &ldquo;exceptionally low&rdquo; margins on football and horsing bets.<br /><br />The betting firm, which has already had to withheld its interim payments to shareholders due to challenging conditions, said it would raise &pound;275m in a deeply discounted rights issue.<br /><br />The group said the one-for-two rights issue of 3bn shares would be priced at 95p per share &ndash; a 48 per cent discount to Wednesday&rsquo;s closing price.<br /><br />The rights issue will be run by banking heavyweights UBS and Deutsche Bank. Net debt stood at &pound;962m at 30 June, but this could fall to &pound;687m as it refinances its remaining debt and reinforce its balance sheet with extra capital in a tough trading climate.<br /><br />Net debt stood at &pound;962m at 30 June, but this could fall to &pound;687m after the rights issue.<br /><br />Ladbrokes chief executive said Chris Bell said that the group&rsquo;s cost cuttings efforts were not enough to remove the risk of the debt pile. &ldquo;There is a sufficient risk that the actions currently being taken will not be enough alone to reduce net debt to a level which it considers to be appropriate within the required timeframe.&rdquo;<br /><br /><strong>DEUTSCHE BANK AND UBS: ADVISERS TO LADBROKES</strong><br /><br />BETTING firm Ladbrokes enlisted its long-term advisers UBS and Deutsche Bank to run the rights issue.<br /><br />Head of UK investment banking Tim Waddell runs the advising for UBS along with colleague Bill Hutchings.<br /><br />Deutsche Bank&rsquo;s head of broking Charles Wilkinson and Edward Sankey, head of European equities, was also on the deal.<br /><br />Wilkinson and Sankey are both long term employees of Deutsche Bank.<br /><br />Boutique broker Greenhill is also acting as financial adviser.<br /><br />UBS Investment Bank and Deutsche Bank are acting as joint sponsors, joint bookrunners and underwriters.<br /><br />Barclays Bank, Lloyds TSB Corporate Markets and RBS Hoare Govett are acting as co-lead managers and underwriters<br /><br />Wadell has been working at UBS&rsquo;s broking division for the past twenty-four years. Wadell is also currently working on the broking side for Cadbury since it received a potential takeover offer from Kraft. Hutchings joined the bank in 2000. Ladbrokes chief executive said that the rights issue will strengthen the group&rsquo;s financial position and put in place a more conservative capital structure.