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De Beers plans $1bn rights issue to cut debts

De Beers, the world's largest diamond producer, has announced plans to raise up to $1bn (£607m) from investors.

The rights issue is designed to help reduce the company's debts, which currently total $3.5bn.

The move comes at the end of a bad year for De Beers, which saw first-half profits fall by 99% as a result of a collapse in the price of diamonds.

Shareholders have already agreed in principle to the rights issue, the company said.

In a statement, De Beers said further investment from shareholders would also help it to take advantage of the recovery in the global economy.

"By reducing De Beers' level of external debt and improving its capital structure, this investment would better enable the company to take advantage of new opportunities... as the recession gives way to recovery," it said.

Falling demand for diamonds forced De Beers mines in South Africa, Botswana and Canada to take production holidays earlier this year.