DSG International, Europe's second-biggest electrical goods retailer, announced a fully underwritten £311 million (€4346.2m) cash call to accelerate its store revamp plan and strengthen its finances.
The British firm, which trades as Currys and PC World in Ireland, whose shares plunged by up to 90 per cent last year on weakening trade and concerns about its finances, said it would raise £210.6 million in a deeply discounted rights issue and £100 million in a share placing. It also said it had renegotiated a £400 million credit facility.
“(This) removes quite a lot of the doubt about the survival of DSG,” chief executive John Browett told reporters.
However, DSG, which runs Currys and PC World stores in Britain, also said group debt at March 7th was £502 million, higher than some analysts had expected, and like-for-like sales in the second half of its financial year dropped 11 per cent.
“It looks like they're in a worse position than we were expecting,” Pali International analyst Nick Bubb said.
Bubb said investors were looking beyond this, relieved at the survival of the group and also encouraged by recent signs of an improvement in consumer confidence.
A GfK/NOP survey today showed UK consumer confidence in April rose to its highest level in a year.
However, Bubb said the figures from DSG and kitchens supplier Galiform, as well as a gloomy update from Home Retail yesterday, showed shoppers were still reluctant to spend on discretionary and expensive items.
Reuters