(Alliance News) - WH Ireland Group PLC on Friday said it raised GBP4.9 million from a share placing and will use the fresh cash to fund a cost-cutting exercise and retention bonuses, as well as to meet regulatory capital requirements.
The London-based stock broker and wealth manager placed 166.7 million new shares with institutional and other investors at a price of 3 pence, an 87% discount to the stock's close on Thursday of 22.50p.
WH Ireland shares were down 64% to 8.00 pence late Friday morning in London, giving a market capitalisation of GBP5.2 million.
The new shares represent 70% of the company's new total of 236.0 million. The placing price was below the stock's nominal value, so WH Ireland said it plans a share subdivision.
"The proceeds of today's placing bolsters our regulatory capital and together with the cost reductions we are implementing, we believe provide a stable platform from which the company can navigate these challenging markets," said Chief Executive Officer Phillip Wale.
WH Ireland also on Friday revealed it made a pretax loss of GBP1.1 million in the three months that ended June 30 on revenue of GBP5.6 million. It blamed the loss on a "multi-year low level of transactional activity in the financial capital markets", hurting its Capital Markets division, and a reduction of assets under management in its Wealth Management division, due to the weaker market reducing the value of client portfolios.
WH Ireland said that, short of the equity raise, it would have been required to pursue a solvent wind down of the company and has been in contact with the UK Financial Conduct Authority about this.
WH Ireland said it had GBP3.7 million in cash as of June 30 and assets under management of GBP1.95 billion.
By Tom Waite, Alliance News editor
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WHIreland (WHI)