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Segro in £500m rights issue after £939m loss

Property developer Segro is planning to raise £500.6 million through a rights issue after the firm revealed a pre-tax loss of £939.2 million.

The former Slough Estates will raise the £500.6 million through the issue of 5,241 million new shares at 10 pence each on the basis of 12 news shares for each one currently held.

The rights issue will help pay down debt which rose to £2.5 billion for the year ended 31 December from £1.7 billion the previous year.

Segro’s results showed a £939.2 million pre-tax loss compared with a pre-tax loss of £246.5 million a year earlier, largely due to property writedowns of £1 billion.

The firm’s net rental income increased to £244.9 million from £204.8 million in 2007.

Segro chief executive Ian Coull said: “The rights issue, combined with the increase to our gearing covenant, will help protect Segro from further falls in property value.

“The net proceeds of the rights issue will be used to pay down some of Segro’s debt facilities and will result in a reduction of Segro’s gearing from 119  per cent to 77 per cent (on a pro forma basis as at 31 December 2008).

“Segro will continue its strategy of asset recycling with increased flexibility to take advantage of opportunities in a cautious manner when the market recovers.”