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Last Updated: Thursday, 16 June, 2005, 12:23 GMT 13:23 UK
Avis shares fall on recovery plan
Avis worker
Avis is fighting fierce competition from cheaper online rivals
Shares in car hire group Avis Europe have fallen sharply after it revealed plans to raise cash for its recovery plan via a rights issue.

Avis said it wants to raise 110.5m in order to fund its recovery, but the new shares will be issued at a 44% discount to Wednesday's closing price.

The group has hit tough times, facing mounting competition from online rental firms amid an industry slowdown.

Avis has tried to cut costs by axing jobs and dividend payments.

Shares in the firm fell by as much as 12% on Thursday before recovering slightly to stand 8.3% lower at 57.5 pence by 1125 GMT.

Recovery plan

Chief executive Murray Hennessey said the group needed to carry out the rights issue to "fund targeted, profitable growth".

The group will offer shareholders four new shares for every seven that they currently hold at a 44% discount to its price of 63p at the close of trading on Wednesday.

The money raised by issuing the 334.7 million new shares is to be used to improve its operating margins by 3-5% over the next three to four years.

The firm has seen its profits drop by almost half between 2001 and 2004.

In April this year, the firm had net debts of 717m.

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