CLF Holdings Plc, the former Combined Lease Finance, is making a cash call to shareholders with an issue of convertible preference shares intended to raise about UKP22m net of expenses. The company is offering the new 50 pence preference shares to existing holders on a one-for-one basis at UKP1 apiece. Each 50 pence share will pay a fixed 8.33 pence gross annual dividend, 6.25 pence after tax, and the shares will carry the right to receive UKP1 per share (rather than the par value) on redemption or repayment of capital on a winding up, unless previously converted. Conversion will be at a rate of 56 ordinary shares for every 100 of the new convertibles held, representing an effective conversion price of 178.5 pence per share against a price in the market after the announcement of 160 pence. Conversion rights will be exercisable on May 31 of any year between 1990 and 2002, and any remaining preference shares may be redeemed at the company’s option after May 31 2002, and anyway all outstanding shares of the issue will be redeemed on May 31 2004. If fully converted, the issue would enlarge the company’s share capital by about 36%. CLF, which leases computers, cars and other capital equipment, and owns Technology for Business Plc – which in turn owns micromaker Rair Ltd – says it wants the cash to bolster its coffers for the cash hungry leasing business after that acquisition and those of Concept Leasing France SA in March, and of 80% of Vehicle Management & Funding Ltd last year. Noting that 1987 was a record trading year with new business written rising 79%, turnover growing 43% and pre-tax profits by 36%, CLF says that the first quarter of the current year has seen record levels of new business achieved with both the quality of business and margins being maintained. The cash is needed to enable CLF to maintain the rate of growth of new business, and will increase its capital base sufficiently to enable it to expand its borrowings substantially without becoming unacceptably highly geared. Taking in Concept Leasing France and the cash from the rights issue, it sees its net assets rising to UKP40.9m from the UKP19.1m shown in the last set of accounts. The rights issue has been fully underwritten by N M Rothschild & Sons Ltd; brokers to the rights issue are C L-Alexanders Laing & Cruickshank and de Zoete & Bevan.
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