UPDATE 1-Pegas IPO to raise up to 264 mln euros-source

(Adds details, background)

PRAGUE, Dec 4 (Reuters) - Czech artificial fabrics maker Pegas Nonwovens will raise up to 264 million euros in a planned initial public offering, a market source said.

The company will offer up to 5.284 million existing and new shares at up to 50 euros a share, the source with knowledge of the deal told Reuters on Monday.

The price of 50 euros would value the entire company at 458 million euros.

The IPO would raise up to 264 million euros for both the firm and its current owners, private equity fund Pamplona Capital Partners I.

The source, speaking on condition of anonymity, said that if the issue is fully subscribed, the stock's free float could be up to 56 percent after the market debut in Prague and Warsaw, expected around Dec. 20.

The source said Pegas, the European number two in the market for non-woven textiles used in hygiene products such as nappies, would issue 2.02 million new shares.

Existing owners will offer 2.575 million existing shares plus 0.689 million in an over-allotment option.

The company has said it expected to release a prospectus on the share issue later on Monday.

There will also be a lock-up period of 180 days, during which the main shareholder would not be allowed to sell its shares, the source said.

Proceeds from the IPO would be used for expansion on markets mainly in central and eastern Europe.

Pegas had a net profit of 11.8 million euros in the first half of 2006, down from 13.2 million euros in the first half of 2005 due to higher debt servicing.

Sales rose to 60.1 million from 52.8 million, while assets stood at 251.9 million at mid-2006. The firm had 138.3 million euros in long-term and 14.3 million in short-term bank debt in June.

Pegas and real estate developer ECM are the first two firms to plan IPOs on the Czech stock exchange since drug maker Zentiva <ZNTVsp.PR> made the first and so far only public offering two years ago. ECM shares will debut on the Prague bourse on Dec. 7. ((Reporting by Jan Korselt, writing by Jan Lopatka, editing by Paul Bolding; prague.newsroom@reuters.com; Reuters Messaging: jan.lopatka.reuters.com@reuters.net; +420-224 190 474))

For main central European company news, double click on [.CEE] E.Europe hot stocks [HOT-EEU] Main E.Europe news [TOP/EAST] Related stories on [HU] [PL] [CZ] [EEU-STX] [EEU-RES] [EEU-E] For real-time index quotes, double click in brackets: Warsaw WIG20 <.WIG20> Budapest BUX <.BUX> Prague PX <.PX>

Keywords: PEGAS IPO/