Shut out of traditional credit markets, Quercus is planning to raise 1.75 million pounds “in additional working capital and to strengthen its balance sheet,” nearly all of which will come from Pentland Group, which currently holds almost 20 percent of the company’s stock. Shareholders must approve a waiver from the takeover code, however, to allow Pentland to increase their stake to more than 30 percent. The thinly-traded company currently has a market cap of 3.1 million pounds, with the stock having fallen over 71 percent in a year.
The immediate need is to refinance 775,000 pounds in loans that have been used to fund the publisher’s development during “prevailing economic and stock market conditions” and the directors “believe that the loans are no longer a viable source of ongoing funding.”
The company says they plan to continue to acquire and grow aggressively. They note that “approximately £650,000 of the funds raised will be used for advances to authors and to expand the company’s list of contracts,” while another 200,000 pounds will go “to strengthen the publishing teams and the foreign rights team.”
Additionally, executive chairman (and holder of over 9 percent of the stock) Anthony Cheetham will become non-executive chairman immediately, which he calls “a natural progression to ensure a stable transition into the next stage of the group’s development.”
Proposal