Invensys tackles debts with rights issue

ENGINEERING group Invensys is seeking to raise £500 million through new shares as it battles to rebuild its balance sheet.

The London-based firm is understood to have asked stockbroker Morgan Stanley to prepare for a rights issue to help it tackle debts of £816 million and a £700m hole in its pension fund.

A cash injection would also give Invensys more time to complete a disposal programme including assets outside its core rail signals and factory controls operations.

Disposal of the group's Baan software and Teccor semiconductor businesses has already been completed along with a £385m deal to sell a specialist metering equipment operation. Other assets thought to be up for sale include its windpower division, home-appliance controls and climate-controls businesses.

The rights issue will need the backing of senior executives at the company before it can be put to shareholders for final approval.

Invensys formed from the Siebe and BTR merger played down market expectations of its sale of assets in November. Returns from the disposal programme would be "in excess of £1.8 billion," rather than the "substantially in excess" mentioned previously.

Chief executive Rick Haythornthwaite said the underlying performance of the firm was good, despite bottom-line losses doubling to £198m in the six months to September 30.

Sales at its production management division grew while its rail signals arm was lifted by a strong order book.