More and more stock market companies looking to shareholders for rescue
The last few days have seen a sudden surge in the number of UK stock market listed companies looking to raise more funds from shareholders and effectively rescue the business. A mixture of falling demand and increased debt servicing costs are seeing more and more companies hit the financial buffers and resort to desperate tactics to raise funds. The entertainment and leisure industry seems to be the hardest hit (apart from the financial sector which has been bailed out by taxpayers) and there are concerns this is just the tip of the iceberg.
While the UK banking sector has grabbed the headlines with regards to increased debt and increased requirements for additional funding many of the small to medium-sized companies have slipped under the radar and are also struggling. Whether shareholders are able or willing to inject additional capital into these companies, to ensure they are going concerns and able to continue trading, remains to be seen. Many of the larger institutional investors are already nursing substantial losses in the property and stock market investment arenas and appear relatively unlikely to support smaller operations in the short term.
The leisure and entertainment sector appears to have been hit hardest because of a dependence upon disposable income which has evaporated over the last few months.
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