Builders Merchant Travis Perkins has announced this morning a rights issue to raise gross proceeds of around £314m - £300m net of expenses - through the sale of almost 86 million new shares.

The rights issue, which is subject to shareholder approval at an extraordinary general meeting scheduled to be held on or around May 27, will offer the new shares at £3.65 - a 51.6% discount on the closing price of each share on May 8.

The move is designed to reduce the group's net debt in order to improve trading throughout the recession by allowing it to invest in its core businesses and strengthen its position to allow speedy recovery when the market improves.

The group also issued an interim management statement this morning for the period January 1 2009 to May 11. Group revenue for the period is down 14.4% in terms of like for like sales. However, the period to April 30 saw merchanting hit far harder than the group's DIY retail division. Merchanting dropped 19% in like-for-like terms, but Retail saw like-for-like revenues dip by just 3.6%.

There was even some growth with Wickes' kitchen and bathroom revenue rising 12.5% on a delivered basis and 22.8% on an ordered basis compared with the same period in 2008.

Looking forward, the statement said: "The Board expects the markets in which the Group operates to weaken until at least the third quarter of 2009. The Board believes recent lead indicators relating to the housing market, such as mortgage approvals, housing transactions and house prices, consumer and customer confidence and construction orders generally show signs of stabilisation. However, the impact of any potential increases in unemployment on these markets and indicators is uncertain."

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