EUROPEAN Leisure is to raise £11.4 million sterling in a rights issue as part of its restructuring programme which is expected to lead to the resumption of dividend payments in 1996/97.

Also, the banking syndicate which effectively rescued the company in 1993 is to raise £20.3 million through the placing of new European Leisure shares (and existing ordinary shares) following the conversion of its preference shares. The syndicate's stake in the company will then fall from 67 per cent to 11 per cent.

European Leisure announced its planned restructuring last month and yesterday revealed the details. The rights issue is on the basis of two new shares for every three shares held at a price of 145p per share compared with a market price of 165p earlier this week. The directors are taking up their full entitlements.

The issue has been fully underwritten by Charterhouse Bank and the funds will be used primarily to fund "a focused expansion programme", the company said. Chief executive, Mr Ian Rock noted that the plan is to add 20 additional amusement units venue bars and American pool outlets over an 18 month period.

Following the restructuring, the gearing will fall from a heady 85 per cent to a more acceptable 56 per cent. The plan, said Mr Rock is to grow the business which should reduce the gearing further. The group is understood to have a gearing target of some 40 per cent by the end of 1997.

The restructuring also involves the conversion of the preference shares, entirely owned by the syndicate, into 13.29 million new ordinary shares of which 12.08 million will be placed with institutional investors, at 145p per share. A further placing involves 1.88 million existing ordinary shares held by member of the syndicate, also at 145p per share.

The restructuring will have to be approved by the European Leisure shareholders at an extraordinary general meeting on October 29th.

The banks in the syndicate, headed by Barclays Bank, stand to make substantial gains from the restructuring. The banks' loans have always been serviced. They paid an effective price of 126p for their preference shares and will do even better from their ordinary shares which they purchased at effectively 60p per share.

Some of the banks, for example, the Bank of Scotland, had already sold their ordinary shares, at a capital gain of around loop per share.

The group's latest results, for the year ended June 30th 1996, confirmed the upward trend in profits. Profit before tax rose by 30 per cent from £4.1 million to £5.4 million. European Leisure which emerged from the old Edenderry Shoe company has all its trading operations in Britain. These include Maygay, the manufacturer of amusement machines. The shares are quoted in Dublin and London.