TalkTalk share value tumbles as it comes under fire over £200m placing
Shares in Warrington-based telecoms company TalkTalk have slumped 8.6% in the wake of an announcement profits would be about millions short of target.
The company yesterday raised £200m in a share placing and announced it was entering into a new deal with Infracapital, the infrastructure arm of M&G Prudential, to invest together in faster and more reliable broadband networks for more than three million homes in “mid-sized towns and cities” across the UK.
TalkTalk will provide £100m out of £500m total equity, with a further £1bn due to be raised from debt markets.
However, year-end profits are now expected to be between £230m and £245m instead of the forecast made in November of between £270m and 300m, the company said.
By close of business yesterday shares fell 8.6% to 109.4 pence.
Meanwhile, the company came under fire from the Investment Association (IA), which represents most of Britain’s biggest investors ,for using the £200m cash injection to pay down heavy debts.
It said TalkTalk raising cash from investors through a placing was “a blatant disregard of the industry-accepted standards”.
The Investment Association said the company’s placing of its shares representing 19.99% of its existing share capital on a non-pre-emptive basis ignored shareholder rights.
An IA spokesperson said: “Pre-emption rights are a vital shareholder protection and their misuse poses a serious threat to shareholder and investors’ interests – the UK’s pensioners and savers.”
However, a TalkTalk spokesman said: A spokesman said: “This is a recognised structure that was chosen to minimise cost as well as use of management time at an important phase of TalkTalk’s growth strategy.”
