* 260 jobs at risk at Gateshead site - CEO
* COVID-19 pandemic could boost plastic notes demand
* Annual profit down 61%
(Adds detail on job cuts, shares, analyst comment, CEO
comments)
By Yadarisa Shabong
June 17 (Reuters) - British banknote manufacturer De La Rue
plans to raise 100 million pounds ($126 million) in new
equity and cut jobs at its northeast England site as part of a
turnaround plan focused on shifting to plastic notes.
The company, hit by a string of recent setbacks including
losing a contract to make Britain's blue post-Brexit passports,
said on Wednesday it would end banknote printing operations in
Gateshead, northeast England, putting 260 jobs at risk.
JP Morgan analysts welcomed the fundraising plan and said
the COVID-19 pandemic might accelerate a shift from paper to
plastic banknotes due to hygiene concerns.
De La Rue Chief Executive Clive Vacher said the health
crisis might also lead countries to replace notes more
frequently.
The loss of the British passport contract, two profit
warnings in 2019, and ballooning debt prompted De La Rue to warn
late last year of uncertainty over the future of the business.
However, Vacher told Reuters that uncertainty would be
dispelled by the fundraising, which must be approved by
shareholders at a meeting on July 6.
De La Rue shares were up nearly 3% at 0820 GMT.
The more than 200-year-old company said annual adjusted
operating profit tumbled 61% to 23.7 million pounds, hit by a
fall in currency volumes and the loss of sanctions-hit Venezuela
as a customer.
Vacher conceded in February that "considerable" work was
needed at the firm, while unveiling plans to boost profitability
by reining in costs and investing in polymer notes.
"We are now well underway with our plans to turn around the
company," he said on Wednesday.
($1 = 0.7953 pounds)
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Anil
D'Silva and Mark Potter)
De La Rue (DLAR)
