Kiln cash call after placing ditched

KILN, the Lloyd's of London insurer that was forced to abandon a £48m placing after its share price soared on the stock market, plans to solve its funding problem by opting for a rights issue instead.

The issue will be pitched at 47p, the same price at which Kiln had planned to make the placing. However, the insurer will also seek shareholder approval to allocate a third of the new shares to US insurer WR Berkley, which will lift its stake in Kiln from 4.8% to 20.1%.

The rights issue, which has been underwritten by Collins Stewart, will double Kiln's market value to about £100m and give it the cash that it requires to capitalise on rising insurance premiums.

When Kiln announced its original plan the stock immediately jumped 5 1/2p to 55 1/2p, meaning the discount on the placing price was greater than the maximum 10% allowed under listing rules. The subsequent proposal of Kiln to raise the price was rejected by institutional investors. Shareholders will be asked to vote on the revised plan at a meeting on 27 May.

The fresh proposal was unveiled today as Kiln said it had suffered a £15.7m pre-tax loss last year, compared with a £2.7m deficit previously, after incurring an £18.1m hit as a result of the terrorist attacks on the World Trade Center. There is no dividend.