British housebuilders Barratt Developments and Redrow have both turned to investors for fresh funds to repair their balance sheets and take advantage of weak property prices to snap up land.
Barratt said today it would raise £545.5 million pounds via a 1.3 for 1 rights issue. The issue is priced at 100 pence per new share which is 63 per cent below yesterday's closing price of 268.5 pence and a 37.8 per cent discount to the theoretical ex-rights price.
The company also said it would place a further 72.9 million new shares with investors at 240 pence, raising an additional £175 million.
"It is now an appropriate time to substantially strengthen the company's balance sheet and reduce its debt levels," Barratt chief executive Mark Clare said in a statement.
"This will also enable the group to develop a number of its existing sites and to take advantage of land purchasing opportunities as they arise," Clare added.
Smaller rival Redrow said in a separate statement that it would use a 13 for 14 shares rights issue to raise gross proceeds of £156 million.
It will issue 148.6 million shares at a price of 105 pence each which is 55 per cent below yesterday's closing price of 233.5 pence and a 38.8 per cent discount to the theoretical ex-rights price.
"The proposed rights issue will strengthen Redrow's balance sheet and position Redrow for growth," Redrow chairman Steve Morgan said. "We now need to enhance our ability to acquire land through selected acquisitions."
Reuters