Poor response to Mackie rights

THERE has been a poor response to the Mackie International rights issue, with most of the issue left with the underwriters. Only 36.85 per cent was taken up by share holders.

The poor response from shareholders is not surprising, however, as the share price had dropped below the issue price last week. The directors, representing almost 15 per cent of the equity, had given irrevocable commitments to take up their rights.

Mackie, the Belfast engineering group, with listings on both the Dublin and London stock markets, launched its one for four rights issue, at 275p sterling per share, to raise £6.68 million, last ,month.

Mr Peter Addison, director of English Trust, the company's financial advisers, said the response was "not as bad" as it appeared because the company had to contend with a number of factors outside its control. These he listed as the uncertain political situation following the recent flare up of violence and the collapse of stock markets last week.

The shares fell below the issue price last week, ,so there was little incentive for them toe take up the new shares. The Dublin guide price yesterday was 253p/257p. Things looked brighter when the rights issue was announced last month. The rights price then was at a 10.5 per cent discount on the 307p market price.

A number of the institutional shareholders are also sub underwriters. With the share price so depressed they are understood to have decided not to take up their entitlements. Instead they decided to take the shares as underwriters, as they were obliged to.

Mr Addison noted that the directors had shown confidence in the company by taking up their rights.

When the issue was announced the company also warned that growth this year would be affected by uncertainties over a major order in China. The company subsequently stressed that the warning did not constitute a formal profit warning.

However, Mackie said that the profit before tax this year would be ahead of last year's £3.3 million, but not by a lot. The Chinese order was worth "several million pounds" and had been delayed because the Bank of China had stopped the contract going ahead. In order to compensate for this loss Mackie had brought forward orders from the second half and the first half of 1997, but that had involved offering its customers discounts.

Part of the proceeds from the right issue will be used to fund a new £13 million foundry in the group's Belfast complex on the Springfield Road. Mackie also announced a number of acquisitions including the purchase of a 17.5 per cent stake in the Belgian company, Uniwear, and the acquisition of ATC, a Belfast manufacturer of electrical controls.

Mackierecorded an increase in operating profit from £2.2 million to £3.0 million last year.