DSGi reassures suppliers with rights issue

DSGi is aiming to raise more than £300m through a rights issue, to fund its transformation plan and reassure trade suppliers and their credit insurers.

Credit insurers Euler Hermes and Atradius have both recently cut the coverage available to DSGi suppliers and the retail goliath admitted this has had an impact on its debt level.

It hopes to raise £211m by offering investors five new shares for every seven owned and a further £100m by issuing 333 million new shares at 30 pence each.

The giant has also renegotiated the terms of its bank facilities and letters of credit.

DSGi said the plan would help it to fund its store refurbishment plan and provide it with financial headroom.

Chief executive John Browett, added: “The refinancing also leaves us well placed to provide reassurance to our trade suppliers and their credit insurers with regard to the group's capital position.”

DSGi saw like-for-like sales for the six months to 18 April tumble 11 per cent. Underlying pre-tax profit for the 52 weeks ending 2 May 2009 will be not less than £42m, it added.

Browett said: “The Renewal and Transformation plan is delivering and we remain extremely encouraged by the results. The continued rollout of the plan is essential to the success of DSGi's business and an integral part of DSGi achieving its medium terms target of 3-4 per cent of return on sales.”