Ladbrokes rolls out £275m rights issue
Raising fresh funds: Ladbrokes. Photo: Bloomberg News
Ladbrokes, the second largest bookmaker in the UK with over 2,300 betting shops, has launched a £275m (€300m) steeply discounted rights issue to shore up its finances.
The bookie said it was raising fresh funds after profits from its soccer betting book were wiped out when fewer than usual games ended in draws.
Only four, or 6pc of the 66 English Premier League soccer matches played this season ended in a draw compared with a five-year average of 25pc, Ladbrokes said.
The first weekend of October was better for the bookmaker, chief executive Chris Bell said on a conference call, with five of the 10 Premier League games ending in a tie.
Ladbrokes said it would offer investors one new share for every two they hold at a price of 95 pence each, 48pc below yesterday's closing price of 181.2 pence.
Suspended
The company also suspended its dividend and said operating profit fell 58pc in the three months to the end of September, with two-thirds of the drop caused by soccer betting.
"Trading has forced management's hand, and this gives us some concern," KBC Peel Hunt analyst Nick Batram said in a note. He placed his recommendation "under review". Shares in Ladbrokes fell 5.4pc in London trading.
The share sale will cut net borrowings to £687m from £962m and leave the bookmaker with an average debt maturity of about four years, finance director Brian Wallace said on a conference call.
"It isn't just trading that has led to the rights issue. We have been reviewing the capital structure since the beginning of 2008," he said.
Net revenue
Net revenue in the three months ended September 30 fell 15pc, while the amount won from customers also slid because of adverse soccer and horseracing results, Ladbrokes said.
Operating profit in the period declined to £22.4m from £52.8m a year earlier.
A popular way to bet on soccer in the UK is to wager on a series of five or 10 matches at once. Punters usually pick a winner for each game rather than predict a draw, benefiting betting companies when matches end without a winner.
"Our football trader has been in the business for 40 years, and says this is absolutely unprecedented," Mr Bell said of English soccer's dearth of draws through September.
The number of soccer games won by the favourite also rose to about 70pc in the third quarter from 55pc normally, Mr Bell said. Profit margins on soccer fell to zero in the three months, from 30pc a year earlier.
- Pat Boyle
Irish Independent
