Ladbrokes rights issue causes wave of short selling
Ladbrokes has become the target of short-sellers, who have taken a combined position in the British bookmaker of 9% following its rights issue last week
LADBROKES HAS BECOME the target of short-sellers, who have taken a combined position in the British bookmaker of 9%.
As reported on EGRmagazine.com, earlier this month Ladbrokes announced it plans to raise roughly £275m to pay off debts by a significantly discounted rights issue of more than three million shares at 95p each “ a discount of nearly half on the then share price of 181.2p. The announcement was timed with the release of third-quarter results showing net gaming revenue down 15%.
Six hedge funds released statements on the London Stock Exchange detailing short positions they had taken on the company the day before the rights issue was announced.
US-registered Morton Holdings took the biggest share, 3.14% of Ladbrokes’ share capital; followed by Blackrock’s Blackrock UK Absolute Alpha fund, which took 2.53%. Shares of 1% each were taken by Catapault Capital Partners, Highbridge Capital Partners, Marshall Wace and Odey Asset Management.
A short-position of 9% is unusually high, with the public outcry last year over the short-selling of shares in British banks caused by short positions of just 2-3%.
However Ladbrokes played down the significance of the event. A Ladbrokes spokesman said: “This is nothing unusual given the market conditions and the fact that we are doing rights issue.”
Morton Holdings and Blackrock had not returned requests for comment at the time of writing.
As reported on EGRmagazine.com, Ladbrokes eGaming fell three places in this year’s Power 50 ranking of the world’s 50 leading operators.
Ladbrokes eGaming managing director Ed Andrewes will appear on the CEO panel at next month’s EGR Live event in London.
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