March 29, 2018 / 7:29 AM / 4 months ago

UPDATE 1-Delivery company DX Group to raise capital; posts HY core loss

(Adds details on equity fundraising, freight unit, share move)

March 29 (Reuters) - UK mail delivery firm DX Group said on Thursday it plans to raise about 4 million pounds to support an ongoing turnaround plan, after posting a core loss for the half-year, largely due to its struggling freight business.

The company - now reorganised into two divisions, DX Freight and DX Express - said early benefits from the turnaround strategy were already apparent.

“Major shareholders (are) fully supportive of turnaround plans,” DX Group said in a statement, adding that it planned to raise capital by issuing ordinary shares at 7.41 pence each.

At 0721 GMT, shares in the company were up 14.7 percent at 8.50 pence.

Activist investor Gatemore Capital Management, DX’s largest shareholder, had earlier opposed the company’s plan to buy the logistics arm of John Menzies in a deal which would have given Menzies majority control of DX. The deal was called off in August.

Loss before interest, tax, depreciation, amortisation and exceptional items stood at 4.4 million pounds ($6.20 million) for the six months ended Dec. 31, compared with a profit of 3.9 million pounds a year earlier.

DX Freight was underperforming, the company said. The freight unit reported a wider 16 pct EBITDA loss of 10.9 million pounds during the period.

“Trading conditions remain challenging, but we are already seeing encouraging signs that our turnaround plans are gaining traction and expect this to build through the year and into 2019.”

The mail, parcels and courier services company also said it incurred an impairment charge of 5.3 million pounds, related to its turnaround plan.

$1 = 0.7102 pounds Reporting by Radhika Rukmangadhan in Bengaluru; Editing by Sunil Nair

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