(By Anthony Miller) Not for the first time Logica surprised investors announcing unexpected refinancing measures. Just after the market closed yesterday (Wednesday) Logica said it is to raise £85m through an accelerated bookbuild (to be completed by the morning!) and use the funds to reduce debt. The plan was to place 122m shares (8.3% of the current issued share capital) at a price to be finalised, but seems to assume Wednesday's 69p closing price. Key shareholders Schroders and Aviva, who between them hold some 25% of Logica’s stock, are apparently on board and the company is confident of raising the full £85m.
Logica also announced it is to peg the div for this year and next at ‘around’ 3p (’07: 5.8p) with progressive increases thereafter. Based on Wednesday's share price, this brings the yield down to 4% from 5% (based on Logica’s 118p share price at 31/12/07) - though any potential share price fall may well fix that 'problem'!
Management reiterated there had been no change in trading conditions since the mid-November trading update, yet they made no mention of any intent to raise more funds then, or when they announced a €500m refinancing package just two weeks ago. This placing may well be, as CFO Seamus Keating says, just a prudent move to shore up funding in uncertain times. But the implied sense of urgency may spook the market. Anyway, fortunately I am well out of the ‘guess the share price’ game now, and so will leave it to investors to interpret as they see fit.
UPDATE:
The placing was very successful, with 135m shares going at 67p, raising just over £90m gross. It looks like this was a smart move and we could well see other players try to emulate it. Logica's shares opened a tad down and are now (9:30 am) trading around 66p.
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