British independent music firm Sanctuary Group Plc today (Feb. 3) confirmed details of a heavily-discounted £110 million ($195 million) equity fund raising as it attempts to recover from heavy lo

British independent music firm Sanctuary Group Plc today (Feb. 3) confirmed details of a heavily-discounted £110 million ($195 million) equity fund raising as it attempts to recover from heavy losses.

In today's announcement to the London Stock Exchange, Sanctuary said it would sell almost 220 million shares in a placing and open offer at £0.50 each, or 0.25 pence before a 75-to-8 share consolidation, representing a 67% discount to yesterday's closing price of 0.75p. Sanctuary stock has a 52-week high of 45p.

Sanctuary has also agreed new banking facilities of £65 million with the Bank of Scotland.

The company had announced within the past week that it was close to clinching an agreement to raise funds from a share sale, the proceeds of which would help pay off debts.

The placing and open offer was conditionally underwritten by its broker Evolution Securities, Sanctuary said.

Group founder Andy Taylor is confident that the financial lifeline will allow the company to press ahead after a troubled financial year in 2005.

"The underlying businesses that are going on are as strong as they've ever been. With the new financial structure of the company, in truth its probably the strongest its ever been," Taylor tells Billboard.biz.

The proposed fund raising is conditional upon the passing of resolutions at an extraordinary general meeting, the date for which has not been announced. A prospectus will be published by Feb. 14 and the admission must occur by March 13, Sanctuary added.

Sanctuary has endured a rocky financial period which many industry observers thought would cripple the company. The London-based firm recently reported a group loss of £142.6 million ($252 million) for the year ending Sept. 30, 2005, up from £26.7 million ($47 million) in the corresponding period a year earlier. Taylor has admitted that the company over-extended itself on the acquisition trail in recent years and had erroneously entered the urban recorded music market.

Urban Records division has since been shuttered, Sanctuary has disposed some "non core" assets, such as its books publishing unit and studios businesses, and roughly 25% of the group's worldwide staff have been culled.

"Urban seemed like a sensible strategic move, but obviously we didn't understand the intricacies to the right degree to make the move," Taylor says. "We did make some wrong strategic moves that we've now corrected."

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