RSA GROUP'S new chief executive
Hester, who took the reins of the
RSA yesterday confirmed it was exploring a rights issue to raise capital, but added that "no final decision" had been taken.
"Anything that we do we would have our shareholders' support," a spokeswoman added.
RSA was hit by a series of profit warnings late last year, which prompted the resignation of former chief executive
Further concerns about losses caused by flooding in the
On Friday, Hester was reported to be exploring plans for a simple share placing, which would have capped the amount he raised to 10 per cent of RSA's market cap, or around £350m.
Escalating the capital raising to a rights issue - which could be priced at a 35 per cent discount once new shares are issued - will increase the amount the firm can raise.
"Fundamentally you wouldn't do a rights issue if you knew you could get all the money you needed through a placing," Canaccord Genuity analyst
"It's hard to envision the money being raised being put to a productive use. That money is going to plug difficulties they have identified." The company is also set to scrap its dividend, saving £170m for the business this year.
A sale of non-core RSA assets, such as the firm's
ADVISERS RSA INSURANCE MICHAEL FINDLAY BANK OF AMERICA MERRILL LYNCH RSA yesterday confirmed it was exploring the possibility of a rights issue to shore up its balance sheet. The company is working with its in-house brokers
Heading up a team to advise on any share issue will be
Findlay, who also sits on the board of
He came to
Before that he was a managing director at Merrill, having moved there in 1998 from UBS and he started his career in the city as a research analyst at Robert Fleming.
Findlay is also chairman of
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