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Logica halves dividend and issues more shares to slash debt

IT services firm Logica expects to raise about £85m via a share issue designed to reduce its debt. It is also more than halving its share dividend for the year to save cash.

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IT services firm Logica expects to raise about £85m via a share issue designed to reduce its debt. It is also more than halving its share dividend for the year to save cash.

Logica announced last month that it was intending to slash its operating costs in a programme that includes job losses among contractors.

Logica expects a 4% increase in sales for 2008, and is working to deliver "modest revenue growth" next year.

Under the terms of the share issue, Logica intends to place 122 million new ordinary shares of 10p each on the market. This represents 8.3% of the current issued ordinary share capital.

Logica's major shareholders, including Schroders and Aviva Investors, have already said they will take a "significant" portion of the new shares, said Logica.

To cut costs further, Logica is more than halving its full-year dividend for the year to 3p per share, down from 5.8p in 2007.

The firm says the dividend for 2009 will also be in the region of 3p.

"The proceeds from the share placing and dividend reduction will be used to reduce debt, providing Logica with additional flexibility should debt markets remain difficult," said Logica.

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