Reed Elsevier has mounted an emergency dash for cash, raising £824m to shore up its finances in a move which sent shares in the Anglo-Dutch publisher down more than 12%.
The company was forced into the discounted sale of shares by its failure last year to sell RBI, its US trade magazines unit, because of the plunging advertising market. The unit owns titles from New Scientist and Variety to Computer Weekly and Flight International.
News of the fundraising, wrapped up by the company's bankers by the close of trading, came as Reed Elsevier announced a drop in half-year pre-tax profits to £188m from £393m as it slashed £140m off the value of its businesses, predominantly RBI, and dumped its ambition of increasing earnings per share this year. The price plunge wiped more than £660m off the value of the FTSE 100-listed business.
The company, which has debts of $8.4bn (£5bn) after a raft of acquisitions, has been hit hard by the recession which has hurt sales of its specialist publications as companies rein in their spending, leaving it in a cash squeeze.
"The downturn in macro-economic conditions over the past year has been severe and unprecedented," said chief executive Ian Smith, who took over from long-serving boss Sir Crispin Davis in March.
"The biggest impact is concentrated in advertising and promotion markets, including pharma promotion in our medical business, law firm directory listings in our legal business, and most particularly in business-to-business markets. The depth and length of the downturn is however having some effect on even our most resilient businesses."
Despite shelving plans to sell the whole of RBI for £1bn last year as the recession hit prices, Smith plans to offload some of US-based magazines, such as Furniture Today, which rely solely on advertising for their revenues.
Reed Elsevier was formed through the merger of UK-based Reed International with Dutch academic published Elsevier 17 years ago. Elsevier takes its name from the Elzevir family, a celebrated 16th-century bookselling dynasty.