The chemicals and paints group ICI has announced details of a fund raising exercise aimed at cutting its �2.9bn debt.

The firm is seeking to raise �808m through a rights issue, in which existing ICI shareholders are offered the chance to buy more shares at a big discount to their current price.

ICI also announced a pre-tax profits of �410m for the whole of 2001, an 11% fall on the previous year.

But the firm said sales had started "satisfactorily" in the new year.

"The Board believes that the results announced today demonstrate the quality and resilience of the business in a tough economic climate," the firm said in a statement.

On the London market, shares in ICI ended the day 17p higher at 341p - a rise of 5.25%.

Rights Issue

ICI said it intended to raise money through a rights issue last week.

The news unsettled investors, with ICI's share price slumping 21% to end the week at 324p.

Under the terms of the rights issue, qualifying shareholders will be offered the opportunity to buy seven new shares for every 11 they hold at a price of 180p, a 44% discount on Friday's closing price.

The company said the money is needed to cut the debts it built up over the past few years, as it shed its bulk chemicals businesses to concentrate on speciality chemicals and paints.

The firm is also planning to sell its chemical catalyst subsidiary Synetix.

"The proceeds of the Rights Issue and the divestment of Synetix will strengthen ICI's balance sheet, improve our financial flexibility, and are expected to stabilise ICI's credit rating," said chairman Lord Trotman in a statement.

'Satisfactory' prospects

During the final three months of last year, turnover at ICI's ongoing businesses was �1.51bn, a 6% fall on the comparable figure for the previous year.

But for the whole year, turnover at its continuing operations rose a fraction to �6.425bn.

And the company gave a relatively upbeat view of the coming 12 months.

"Preliminary indications are that... sales overall (in the new year) have started satisfactorily and the Board believes that prospects for the Group as a whole for the current financial year are satisfactory.