Rexam preparing £350m rights issue

Packaging group Rexam has confirmed that it is considering an equity raising to see it through the current difficult market conditions.In response to press speculation about a fundraising, Rexam, which makes cans and plastic packaging, said the risk having its rating downgraded to sub investment grade had increased significantly. According to newspaper reports, Rexam, which recently had its rating cut to BBB- from BBB by the agency Standard & Poor, is preparing a £350m rights issue."Accordingly the Company is considering a number of options including an equity raising," it said.The firm said that although trading conditions in recent months have shown no upturn from the first quarter, half-year results, which are to be announced on Thursday, will at least meet market expectations."With the Board now seeing no upturn in current trading conditions through 2009, management has launched a number of significant cost saving initiatives and is considering others which, with those already announced, will have a material benefit on Rexam's performance in 2010," the firm said. "However the absence of upturn will reduce Rexam's ability to generate significant free cash flows to pay down debt in 2010."