The subscription is at 2.5p compared to an overnight price of 4.5p.
Fund manager Phoenix, the owner of toy maker Hornby, is to take over troubled stamp and collectibles business Stanley Gibbons PLC (LON:SGI) through a £6.2mln share subscription.
Phoenix’s UK fund will also take on £17mln of Gibbons’ debt (from RBS) in addition to the share investment through a transfer of £10mln and a repayment of £7mln.
READ: Stanley Gibbons: Philately will get you nowhere
Synonymous with stamp collecting, Gibbons has been through the mill after an ill-starred attempt to set up an electronic trading platform for collectibles.
The group is in breach of its banking covenants with its existing debt arrangement due for renewal in May.
Following the subscription, at 2.5p compared to an overnight price of 4.5p, Phoenix UK’s equity stake will be 58%.
As recently as 2014 the shares were worth 374p.
The subscription money will be used for inventory (£1.2mln), to pay outstanding creditors and for working capital.
Phoenix UK will also acquire the title to the debts of SG Guernsey, which is in administration, for £2.75mln and has agreed to buy its stamps inventory.
Gibbons said: “There is an opportunity to grow online revenues and we plan to refocus our E-commerce strategy on selling the group`s own proprietary assets of high-quality collectibles and world-renowned publications.
“The core activities of the group are conducted through the Stanley Gibbons and Baldwins divisions, which share similar characteristics and benefit from commercial advantages associated with being market leaders in the philatelic and numismatic markets respectively.”
Phoenix UK Fund is a Bahama-domiciled mutual fund with approximately 145 underlying investors comprised of a mixture of institutional and high net worth individuals.
The investment ethos is to back companies it believes have long-term intrinsic value and it can hold its stakes for years. The fund has assets under management of approximately £215mln.