Greene King to raise £207m via rights issue

Suffolk brewer Greene King has announced plans to raise more than £200m through issuing new shares to investors.

The group said it was issuing nearly 81 million new shares at a price of 270p per share to raise £207.5m in order to fund "selective acquisitions at attractive prices of freehold, retail pubs in the Home Counties, London and Scotland", as well as buy back some of its securitised debt at "significantly below par value".

Greene King's shares closed yesterday at 553p.

The brewer would be the latest pub sector business to dip into the market to buy back its debt from creditors. Punch Taverns announced recently it had repurchased bonds with a face value of £15m, though paid nowhere near that figure in the deal.

The move is popular at the moment because debt in some cases is being traded at up to less than half its face value.

Greene King said its pre-tax profit for the year to May 3 would not be less than £115m and planned to pay a final dividend of 15.1p per share, in line with last year.

The brewer said that despite the worsening economic outlook since the beginning of the year, trading overall had "generally improved".

It said that after 49 weeks, like-for-like sales across its managed pub arm were up 0.8 per cent; its tenanted and leased business saw like-for-like profit is six per cent up (for 48 weeks), its brewing business saw own-brewed volumes up 1.8 per cent and its, Scottish business, Belhaven, saw retail like-for-like sales growth of five per cent.

In the year to date Greene King said it had completed 124 property and land disposals, achieving proceeds, "ahead of book value, of £43m".

Rooney Anand, Greene King's chief executive, said: "Greene King is currently unique amongst the major pub companies in paying down debt while keeping up levels of capital investment and continuing to pay dividends to our shareholders.

"This has been achieved through a consistent, long-term approach combined with strong operational skills and financial discipline throughout our businesses.

"Recent trading, which has been resilient against a demanding backdrop, underlines the success of this strategy."