UPDATE 1-Cap&Reg seeks $96.5 mln Junction equity issue

* Proposes sale of retail park fund units at 40 pct discount

* AREA Property Partners to take 50 mln stg of new units

(Adds details)

LONDON, April 20 (Reuters) - British property fund manager Capital & Regional (CAL.L) is to raise around 65 million pounds ($96.47 million) of equity to shore up its indebted Junction retail parks Fund via a sale of new units at hefty discounts.

AREA Property Partners, formerly Apollo Real Estate Investors, is proposing to purchase 50 million pounds, or 77 percent, of the new issue, with the balance to be subscribed by a number of existing unit holders, Capital & Regional said.

Units are expected to be issued at a price of around 18 pence, representing a discount of around 40 percent to the net March unit price of 29.7 pence.

The issue is expected to close by the end of May and will be accompanied by changes in the fund's banking arrangements designed to increase its financial flexibility.

These include an increase in the loan-to-value covenant to 90 percent in the period to Sept. 30, 2010, and an extension of the fund's core credit facility to April 2014.

"Once completed, the new equity and the amendments to the banking arrangements will not only strengthen the Junction's financial position, but ... allow the Fund to benefit from the cyclical recovery of the sector over the next four to five years," Chief Executive Hugh Scott-Barrett said in a statement.

Capital & Regional founded the Junction Fund in conjunction with Aviva Investors Global Services Ltd, part of Aviva Plc. (AV.L). The fund portfolio was valued at 789 million pounds at Nov. 30.

(Reporting by Sinead Cruise; editing by Simon Jessop)

(See www.reutersrealestate.com for the global service for real estate professionals from Reuters) ($1=.6738 Pound) (Editing by Simon Jessop)