LONDON (Alliance News) - Power producer Rurelec PLC on Friday said it has proposed an open offer of shares and capital reorganisation as it looks to shore up its financial position.
The company has proposed an open offer of up to 353.5 million shares to be issued at 1.00 pence per share, raising GBP3.5 million for the company. Shareholders will have the right to subscribe for open offer shares on the basis of 1 open offer share for every 1.59 ordinary shares already held.
Rurelec also proposed a capital reorganisation, under which it will sub-divide each share in the company into one new ordinary share and one deferred share. The new ordinary shares will have the same rights as the existing ordinary shares, but the deferred shares will not carry any voting rights.
The group said it will use the proceeds from the open offer to provide working capital for the business and to safeguard its existing assets. It also will pay some outstanding creditors and will secure its assets, in particular turbines held in storage facilities for its Chile-based projects.
Rurelec said it intends to streamline its operations to cut costs and will pursue the sale of its non-core assets, including its Peruvian hydropower portfolio.
The company needs to raise capital in order to meet the costs of the business over the next year. It currently faces a cash shortage and is managing its resources carefully on a day-to-day basis.
The plans will be put to shareholders of the company at a meeting on November 30.
Shares in Rurelec were down 18% to 0.9 pence on Friday.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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