The media group has moved to reduce its debt burden

The company, which operates STV in Scotland, issued new shares worth �95m which it said should reduce its debt burden to about �40m.

The new money should also help it avoid a cut-price sale of its Virgin Radio business while helping to reduce its interest charges.

SMG's shares fell by 15% at the news but closed the day up 5.25%.

Appetite for a float or trade sale of Virgin Radio had waned in tighter credit markets, but SMG said the cash would allow it to sell Virgin from "a position of strength".

Chief executive Rob Woodward said the fund-raising manoeuvre was "an important step in the transformation of the group's balance sheet".

Analysts have predicted the company will pay �15m in interest charges this year.

This bill was set to soar still higher in 2008 before the rights issue, which will take place later this month.

Cost-cutting moves

The group postponed the sale of the station in September after offers reportedly came in below its �80m target price.

Virgin's book value was written down to �105m earlier this year - a lot less than the �225m SMG paid in 2000 when it bought the station from DJ Chris Evans's Ginger Media Group.

SMG's other moves to reduce debts include the �62m sale of its Primesight billboard advertising business to private equity firm GMT Communications in September.

Loss-making cinema advertising business Pearl & Dean is also earmarked for disposal, leaving the group focused on Glasgow-based STV, which also has news studios in Aberdeen, Dundee, Edinburgh and Inverness.

STV's production business has made hit peak-time dramas such as Taggart and Rebus.