(Reuters) - British banknote manufacturer De La Rue (DLAR.L) plans to raise 100 million pounds in new equity and cut jobs at its northeast England site as part of a turnaround plan focused on shifting to plastic notes.
The company, hit by a string of recent setbacks including losing a contract to make Britain’s blue post-Brexit passports, said on Wednesday it would end banknote printing operations in Gateshead, northeast England, putting 260 jobs at risk.
JP Morgan analysts welcomed the fundraising plan and said the COVID-19 pandemic might accelerate a shift from paper to plastic banknotes due to hygiene concerns.
De La Rue Chief Executive Clive Vacher said the health crisis might also lead countries to replace notes more frequently.
The loss of the British passport contract, two profit warnings in 2019, and ballooning debt prompted De La Rue to warn late last year of uncertainty over the future of the business.
However, Vacher told Reuters that uncertainty would be dispelled by the fundraising, which must be approved by shareholders at a meeting on July 6.
De La Rue shares were up nearly 3% at 0820 GMT.
The more than 200-year-old company said annual adjusted operating profit tumbled 61% to 23.7 million pounds, hit by a fall in currency volumes and the loss of sanctions-hit Venezuela as a customer.
Vacher conceded in February that “considerable” work was needed at the firm, while unveiling plans to boost profitability by reining in costs and investing in polymer notes.
“We are now well underway with our plans to turn around the company,” he said on Wednesday.
Reporting by Yadarisa Shabong in Bengaluru; Editing by Anil D'Silva and Mark Potter