Bosses say 'no' to Mayflower rights

FORMER Prime Minister John Major will not be taking up his £47,000 share of a £66.7m rights issue made today at engineer Mayflower, where he is a non-executive director.

His chief executive John Simpson and fellow directors are joining him by not taking up their right to subscribe to the issue, which is being made on the basis of four new ordinary shares for every 11 they hold at 70p apiece.

Simpson said the directors could not afford to take up the rights as they were 'not very well paid'.

They will support the rights issue by selling their rights to the shares in the market and using any cash raised to buy shares. This technique is known in the market as 'swallowing the tail' of a rights issue, a common-City practice. The £66.7m rights issue has been fully underwritten by Credit Suisse First Boston and Peel Hunt.

The struggling bus and coach manufacturer is planning to use the cash raised from the rights issue to make small strategic acquisitions and expand into new markets.

It plans further investment in new technology that could lead to dramatic improvements in fuel economy and emissions from bus and commercial vehicle engines.

Some of the cash will be used to reduce the debt from £210m to about £150m said Simpson, who confirmed that the group would not be mounting a management buyout.