Reed Elsevier Group PLC, reported Thursday that its first-half profit fell 48 percent and said it would sell new shares to raise money to cope with debt from its acquisition of ChoicePoint Inc.
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The company’s shares plummeted 12.5 percent to 420 pence ($6.93) on the London Stock Exchange.
Reed Elsevier made 161 million pounds ($264 million) in the six months ended June 30, compared with 309 million pounds in the same period in 2008. It said advertising and promotion markets had been affected by the global economic downturn, particularly in business-to-business markets.
Revenue rose 3 percent to 3.1 billion pounds.
The Anglo-Dutch company said it would issue new shares because its current level of debt is too high. It said it had intended to fund its 2008 acquisition of ChoicePoint Inc., a U.S.-based provider of data services to the insurance industry, for $4.1 billion partly through the disposal of its Reed Business Information unit.
But the sale of that unit, which publishes magazines including Variety and New Scientist, never went through due to the credit crisis and a deterioration in the economic outlook.
?Last year?s acquisition of ChoicePoint and the terminated sale of RBI have given us more debt than is prudent in current economic conditions,? said chief executive Ian Smith. ?The equity raising will address our stretched credit metrics and ensure that we are appropriately resourced to invest in the business, capture market opportunities and increase competitive differentiation.?
Reed Elsevier said it intended to place up to 109.2 million new ordinary shares in London-based Reed Elsevier PLC and up to 63,030,989 new ordinary shares in Amsterdam-based Reed Elsevier NV. Both amounts represent approximately 9.9 percent of share capital.
