FRANKFURT, June 15 (Reuters) - Heidelberg, the world's largest maker of printing presses, said on Monday it would seek approval from shareholders to raise additional capital, helping to send its shares down more than 6 percent.
Heidelberg wants shareholders at its July 23 annual general meeting (AGM) to give it the green light to seek more authorized capital, equivalent to 20 percent of its shares, it said in its invitation.
"This would come on top of an already existing 30 percent approval. In other words, 50 percent altogether," a company spokesman said.
Heidelberg said last Tuesday that it would have collapsed had it not received about 850 million euros ($1.18 billion) in state aid and that it would look to improve its undercapitalised balance sheet now that it had secured access to credit, which led shares to tumble 10 percent during the day's session.
Chief Executive Bernhard Schreier said at the time that management was still drafting its AGM invitation and was considering to seek approval for authorized capital equivalent to 50 percent of its shares -- the legal maximum in Germany -- which could be used to improve the company's capital structure.
This latest approval sought to issue new shares would be valid until the start of July 2014.
M.M. Warburg analyst Eggert Kuls said he expected financing costs in the current fiscal year to the end of March 2010 would increase by roughly a fifth to 140 million to 145 million euros, roughly 6 to 7 percent of the company's revenue, due to the costs for its state guarantees.
Heidelberg also has forecast another annual loss in fiscal 2009/10, which would further shrink its capital base. The company's equity dropped to 796 million euros in 2008/09 from 1.19 billion in the previous year, bringing its ratio versus total assets to just 24.6 percent.
"It will become tight for Heidelberg in the mid-term once its new financing structure expires in three years. My forecasts show its equity shrinking by half to 400 million euros by the end of its fiscal year 2011/12," Kuls said.
Kuls, who recommends investors to sell the stock, said that Heidelberg's balance sheet was "absolutely undercapitalised" and that management would be well advised to raise its capital by 300 million to 400 million euros down the line when equity markets recovered.
Shares in Heidelberg were down 4.6 percent at 4.40 euros by 1218 GMT, still offering a near 30 percent downside to Kuls price target of 3.20 euros. ($1=.7191 Euro) (Reporting by Christiaan Hetzner; editing by Karen Foster)