SHANKS, the waste management group, launched a massively discounted £71m cash call yesterday, saying it needed to cut its debt, and said its pre-tax profit was down 18 per cent to £33.9m.<br /><br />It will issue 158.7m new shares, giving two new shares for every three existing ones, at 45 pence each, around half the company’s current stock price.<br /><br />Chief executive Tom Drury said that the main reason for the rights issue is to pay down debt, “but what we’re not going to do is to take the money and re-gear the business by immediately investing it quickly”. Shanks has around £290m of net debt.<br /><br />The rights issue comes a month after the company agreed a £250m bank refinancing to give it additional headroom and allow it to invest further in recycling, organic processing and the British private finance initiative (PFI) market.<br /><br />Revenues at the company rose 24 per cent to £697m from the previous year, but Shanks axed its final dividend.<br /><br />Shanks is the latest in a series of companies which has turned to its shareholders as they seek funding. Miner Lonmin, launched a 2-for-9 rights issue earlier this month.<br /><br /> <!--StartFragment--><strong>ADVISERS</strong><!--EndFragment--><br /> <!--StartFragment--> <strong>JAMES LUPTON GREENHILL</strong><br /><br />SOLELY advising Shanks in its rights issue is Greenhill’s James Lupton.<br /><br />This is the third fund raising which Greenhill has advised on in the past two weeks, but the first to be made public. The other two companies it has helped raise money for remain unnamed.<br /><br />“The responsibility of the sponsor is high when selling shares onto the market,” Lupton said yesterday.<br /><br />Lupton founded Greenhill in London with colleague Simon Borrows 11 years ago. Both previously worked at Barings Bank until its collapse in 1995. It has been advising Shanks for the past 18 months, Lupton added.<br /><br />Underwriting the deal is RBS Hoare Govett, lead by Neil Collingridge. Also on his team are John MacGowan and Hugo Fisher.