Page 10 - Stakis C Case Study

The banks however, refused to agree a reconstruction. The

£50 million was not enough. After some negotiation in

October, a reconstruction with 9 banks was agreed on the
basis that an additional £20 million were raised. Michels and

Chisman had, therefore, to pull off a fairly substantial task -

simultaneously to sell Ashbourne, make a rights issue and

renegotiate bank facilities to achieve the reconstruction.

By New Year the sale of Ashbourne was agreed. In the last

two weeks of January Michels and Chisman did a

comprehensive round of City Institutions to market the
rights. In this they were trying to achieve three things:

a) to persuade those institutions who were existing
shareholders to take up their rights - that is to buy one

share at 32p for every 3 shares that they currently

owned.

b) To get a fair number of the institutions to underwrite

the issue.

c) Since they knew that the Stakis family would not take
up their rights they needed to find people willing to buy

approximately 25 per cent of the new issue.

By the 22nd January the whole issue £28 million was totally

underwritten.

In January 1993 shares in Stakis rose 4 pence to 45 pence
after the reporting of pre-tax profits of £305,000 for the year