Womenswear specialist Alexon has unveiled plans to raise £20.3m to accelerate its turnaround.
The troubled retailer said the capital raised will total £18.5m net of expenses and that £10m would be used to fund its plans to exit or renegotiate rents on properties that have unfavourable terms or are in poor locations.
The remaining £8m would be used to invest in outdated IT systems, to refit existing concessions and open new concessions and standalone stores.
Alexon, which operates under the Alexon, Ann Harvey, Minuet, Dash, Kaliko and Eastex fascias, said it had identified 63 onerous leases out of its 108 and expects to save £5.2m a year by terminating some and renegotiating rents on others.
Alexon intends to raise the capital through the placing and three-for-two offer of shares at 20p each. The issue price represents a 40.7% discount to the closing price of 33.75p per share on March 4, the day before the capital raising was announced.
But Seymour Pierce analyst Freddie George said: “The company still does not have significant headroom even after the £18m capital raising programme. Net debt is forecast at £9m at January 2010, well above original estimates and the company will only have a small cash balance at January 2011.”
Alexon said its pre-tax losses for the year to January 30, 2010, were not expected to be above £1m and that trading had continued to be encouraging since the start of the new financial year.