PREVIEW-Focus on Altadis rights isssue at Imperial results

LONDON, May 16 (Reuters) - The size of a rights issue Imperial Tobacco (IMT.L) plans to launch to pay for its purchase of Altadis will be the focus of the British group's half-year results next week, analysts said on Friday.

The world's fourth-largest cigarette group completed its 12.6 billion euro ($19.50 billion) acquisition of the Franco-Spanish cigarette maker in late January and needs to announce its rights issue, which it has capped at 5 billion pounds, by July 18.

Analysts say the size of the share issue will be below this cap and the price deeply discounted to avoid any potential overhang of stock in a risk-averse market.

"We believe Imperial may launch its rights issue at its interims on May 20 and that the issue could be smaller than expected," said analyst Charles Manso de Zuniga at brokers Dresdner Kleinwort. "The deeper the discount, the lower the risk of a overhang."

He is assuming a rights issue of 3 billion pounds and says it makes sense to announce it at its half-year results on May 20 to give it some leeway ahead of the July 18 deadline.

JP Morgan analysts see 4.4 billion pounds and Deutsche Bank 4.8 billion pounds.

Other analysts say it takes around one month to organise a rights issue so if not at the results it would have to come soon after as its one-year bridge loan expires on July 18, one year after it first announced its agreed deal to buy Altadis.

Imperial says its rights issue will be sized at the minimum level required to maintain its investment grade credit rating.

Imperial first-half results for the six months to end-March will include around two months of Altadis.

Analysts expect adjusted earnings per share to be up 15 percent at a consensus of 70.7 pence within a range of 66.2 to 75.9p after 61.4 pence the previous year.

The group is also likely to update on planned annual synergies from the Altadis deal which were put at 300 million euros by the end of the second year after purchase, and analysts think this figure may be pushed up to 350-400 million euros.

The Altadis takeover strengthened Imperial's position as the world's fourth-largest cigarette group behind Philip Morris International (PM.N), BAT (BATS.L) and Japan Tobacco (2914.T), as it jumped to No 2 from No 4 in Europe behind PMI. ($1=.5138 Pound) (Reporting by David Jones; editing by Sue Thomas)