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May 1, 2009 3:00 am
Mecom, the pan-European newspaper group run by David Montgomery, former chief executive of Mirror Group, is planning to raise £140m in equity to pay down its debt burden as it struggles with a sharp decline in advertising revenue.
The group, which has net debt of £669m, has received non-binding letters of support from some of its existing shareholders and new institutions for the equity issue, which it expects to launch in mid-May.
Mecom, which has been selling assets to pay debt, said advertising revenue fell 20 per cent in the first quarter, following a 10 per cent decline in the second half of 2008, but said March and April showed signs of stabilisation. The shares fell 1p to 5.2p.
If trading conditions deteriorated further Mr Montgomery said he would look at further disposals. "But at the moment it is not and will not become necessary."
As part of further cost-cutting, about 500 jobs are expected to go. Full-year revenue rose to £1.4bn (£905m). Losses, before exceptional items, rose from £47.5m to £52.7m.
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