CLOTHING retailer Laura Ashley has launched a much-reduced rights issue to help fund the closure or disposal of its loss-making European operations.

The company has been forced to cut the price on the share sale to raise £8.2m after seeing its share price slump since the start of the year.

The cash-call is priced at 6p a share - 25 per cent lower than the 8p price it indicated when the move was announced in January.

The company is now seeking £800,000 less than the £9m it announced three months ago.

There are 203 Laura Ashley stores in the UK and more than 40 in mainland Europe, although the group has begun shaking up its continental portfolio.

Following a disappointing Christmas, it said it planned to exit completely from Germany and reduce its presence in Holland, Belgium and France.

The company yesterday confirmed it was still in early stage negotiations with a prospective buyer or franchisee for some of the operations.

A deal could reduce the cost of the group's exit plans.

Chief executive KC Ng said: "The closure or disposal of our loss-making operations in continental Europe will enable us to sharpen our focus on our other operations, particularly in the UK."