Invensys gets £2.7bn financing

TROUBLED engineering group Invensys finally launched its widely-predicted £2.7bn refinancing plan today, including a £450m rescue rights issue.

The whole package will be underwritten with £625m raised by the issue of high-yield bonds and banks providing five-year credit facilities totalling £1.6bn.

Shareholders will be able to subscribe to the rights placing of more than two million new shares on the basis of five for eight at 21 1/2p each.

Underwriters to the placing will be Cazenove, Morgan Stanley and Tricorn Partners. Deutsche Bank will be sole underwriters to the senior credit facilities and high-yield bonds.

Speculation about the rights issue has swirled in the City since last autumn when analysts predicted that chief executive Rick Haythornthwaite's £1.8bn disposal programme would run into trouble. Today Haythornthwaite said the refinancing would transform Invensys.

The first £515m tranche of debt is due in June, with further repayments to clear total debts due in April 2005 of £350m and August 2005 of £880m.

Haythornthwaite has been negotiating with creditors for better terms. He has also been trying to sell off two-thirds of the business for an estimated £1.8bn.

The problem is that there are scores of engineering businesses up for sale, creating a buyer's market. Although the metering business was sold for £400m this sale disappointed because it was less than the £600m expected.