It may seem a little strange to make a rights issue at such a deep discount that it is irresistible and therefore does not need expensive (or even cheap) underwriting, and then give a lot of the money back again by bumping the dividend and paying it out on the new shares as well as the old straight away – but Stratagem Group Plc, the miniconglomerate that bought what was left of the old MBS computer services business, reckons that it is saving shareholders up to ú800,000 on commissions to brokers and fund managers, legal opinion, auditing and other costs by making its rights issue at such a deep discount, and that it can therefore afford to be generous with the dividend. It is offering five new shares for every six held at 100 pence, against 176 pence in the market, and looks to raise ú15.7m at a cost of 1% of the money raised, rather than the 5% or more that smaller companies usually have to pay. It plans small acquisitions within its present businesses of computer services, industrial doors and car distribution, plus strategic investments into new areas. In the short term the issue will be used to repay the company’s net debts, which were ú8.9m at end-June. The company paid an interim dividend of 2.0p net per existing ordinary share on July 1 and intends, in the absence of unforeseen circumstances, to declare and pay a final dividend of 4.0p net, up from 3.5p net in 1994, taking the total to sixpence, up from fivepence in 1994, the final to be paid on old and new shares.
