(Adds quotes and further background)
By Iain Withers and Abhinav Ramnarayan
LONDON, Sept 4 (Reuters) - Britain is extending an easing of
cash call rules to help UK-listed companies raise vital funds
during a COVID-19 induced economic slump.
The Pre-Emption Group (PEG) of finance organisations, which
issues guidance on rights issues and fundraisings, said on
Friday it would extend the easing of its guidelines by a further
two months to Nov. 30.
Under normal "pre-emption" rights best practice, companies
can raise up to 10% of their share capital without obtaining
shareholder permission, but under eased guidelines this has been
doubled to 20%.
Since the measure was introduced on April 1, British
companies have raised 23.7 billion pounds ($31.5 billion) in the
UK market and 125 of the issuances have been to raise funds
urgently needed to weather the coronavirus crisis, PEG said.
Most notably, events company Informa raised 1
billion pounds in a sale equivalent to 19.99% of its share
capital in April. Others such as online retailer Asos,
National Express, WH Smith and reinsurer Hiscox
have also made use of the eased rules.
This dash for emergency cash by British companies provoked
some backlash from investors earlier in the year, though many
remained largely supportive.
PEG said it had decided on the extension to allow a raft of
expected equity offerings during the third quarter -
traditionally a busy time for share placings as investors come
back from their summer breaks - to take advantage.
"We have chosen 30th November to allow companies more time
to assess any unforeseen consequences of COVID-19-related
financial and cashflow developments," PEG said in a statement.
It stressed, however, that the measures were always intended
to be temporary and that it was important to return to the
expectations within its statement of principles after that date.
PEG is based at Britain’s Financial Reporting Council, which
regulates company auditors and governance.
($1 = 0.7522 pounds)
(Reporting by Iain Withers and Abhinav Ramnarayan; Editing by
Dhara Ranasinghe and Susan Fenton)
