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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 &pound;275m cash call. <br /><br />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 &ldquo;exceptionally low&rdquo; margins on Premier League football bets. <br /><br />Of the 96 games played so far in Britain&rsquo;s top flight division only 15 have been draws, which has meant bad news for bookies as most punters gamble on a win. <br /><br />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 &ndash; at a 48 per cent discount to the market price &ndash; would reinforce its balance sheet. <br /><br />Net debt stood at &pound;962m at 30 June, but this will fall to around &pound;687m after it refinances its remaining debt and reinforces its balance sheet with the extra funds raised.<br /><br />Ladbrokes chief executive Chris Bell said that the rights issue was vital, as the group&rsquo;s cost cutting efforts were not enough on their own to remove the risk of the debt pile. <br /><br />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.<br /><br />Panmure Gordon analysts said: &ldquo;Ladbrokes&rsquo; recently announced rights issue should bring capital ratios into line with the peer group but operational challenges remain.&rdquo;<br /><br /><strong>LADBROKES ADVISERS<br /><br /></strong>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.<br /><br />Wadell has been working at UBS&rsquo;s broking division for the past twenty-four years. Hutchings joined the bank in 2000. <br /><br />Wadell is also currently working on advising Cadbury, which is at the centre of a bid from US rival Kraft.<br /><br />Deutsche Bank&rsquo;s head of broking Charles Wilkinson and head of European equities syndicate Edward Sankey were also on the deal. <br /><br />In addition to Ladbrokes, the broking team has also advised TUI Travel and Drax (for a convertible bond and equity placing respectively).<br /><br />Boutique broker Greenhill is also acting as financial adviser. UBS Investment Bank and Deutsche Bank is 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 />Ladbroke is paying &pound;10.6m in fees.<br /><strong></strong>