Cookson's £278m rights issue reaches 45% backing

Cookson claimed to be edging towards success with its £277.5m rights issue yesterday when the debt-laden engineering group said shareholders representing 45 per cent of the equity had pledged to take up their rights.

However, the news had little impact on the share price which closed up 0.75p, or 2.8 per cent, at 27.25p, marginally above the 25p rights price.

Some analysts pointed out that the shares may have been helped by a more buoyant stock market over the past two weeks. John Nuttal at Investec Henderson Crosthwaite also pointed out that Cookson had only managed to secure the backing of relatively few new shareholders since it launched the cash call in mid-July.

"It seems a little disappointing that since 19 July ... when they had secured indications from 36 per cent of shareholders, they have only managed to secure an additional 9 per cent," he said. As the rights issue is not underwritten, it is likely to fail if the share price falls below 25p.

Cookson said it had received the "new written indications" from shareholders over the past week. However, the letters of intent are not binding and shareholders have until 28 August to make up their minds. Cookson is seeking the money to cut debts of £750m built up during a £1bn acquisition spree.

Separately yesterday the company said current trading remained in line with expectations. Cookson added that "borrowings under the company's medium-term bank facilities remain at anticipated levels".

Morley Fund Managers, which controls 7.75 per cent of Cookson's equity, is one institution that has pledged its support.

Standard Life, which raised its Cookson stake to 3 per cent earlier this week, is also backing the fund-raising. Tony Hood, investment director, said: "We believe Cookson's plans to raise funds through a rights issue is the correct way to proceed. We also believe trading conditions will improve in the longer term and support the actions of the group."

Cookson's rights issue has suffered a stormy passage, with difficult markets. At one stage the share price plunged below 20p, well short of the rights price.