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UK gambling group William Hill plc has confirmed it intends to raise GBP 350 million through a rights issue and has scrapped its final dividend. The proceeds of the rights issue will be used to reduce debt, currently standing at GBP 1.2 billion, the company has disclosed.
The 1 for 1 rights issue will be priced at 105 pence per share, a deep discount to yesterday's closing price of 246.75 pence. The company said the decision to issue equity had been driven by the dramatic deterioration in credit markets since August 2007, which had prevented it from refinancing its existing bank

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facilities in full. However, it had obtained new facilities with its banks which will provide GBP 838.5 million in loan funding.
In related news, Reuters reported that 15 000 employees of the group, including management, are on a temporary pay freeze.
Despite the sobering news, the group reported a generally positive performance under present day circumstances. Group gross win of GBP 1 022.5 million was achieved and net revenue of GBP 963.7 million for the year ended 30 December 2008 posted, 6 percent up on the FY 2007 numbers whilst operating profit declined 1 percent to GBP 278.6 million.
Underlying pretax profit for the 52 weeks to Dec 30 of GBP 216.1 million was recorded, ahead of market expectations.
The group's expanded online business, augmented by the deal with Playtech which brought about the formation of William Hill Online, helped trading into 2009 to remain robust. The first eight weeks of 2009 saw net revenue climb 9 percent on the same period in 2008, with the sportsbook, bingo and skill games performed particularly strongly.
Over the year as a whole, the online business achieved net revenue growth of 13 percent, operating profit growth of 10 percent and an 18 percent increase in active player accounts. The company said this reflected the increased focus on the growth opportunities in online gambling, following the appointment of Ralph Topping as chief executive in February last year.
The company said its preferred channel for reaching international players in a cost-effective and geographically spread manner was now via the Internet.
William Hill's retail business, which contributes over 80 percent of the group's gross win, turned in a sterling performance, growing by 7 percent with a similar increase in operating profit despite the difficult economic conditions. The company is budgeting for GBP 57 million in capital expenditure in 2009.
William Hill continues to show "robust operational performance," noted chairman Charles Scott. Net profit for 2008 rose to GBP 234 million, well up from GBP 157.4 million a year ago, he pointed out.

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