UPDATE 2-Frankie & Benny's owner to raise 175 mln pounds ahead of reopenings

* Co plans to issue new shares

* Expects to reopen most sites in April

* Expects sales to recover quickly on reopening

* Shares up 6% after earlier 17.5% rise (Adds shares, analyst comment, details on reopening and outlook)

March 10 (Reuters) - Restaurant Group set out plans on Wednesday to raise 175 million pounds ($242.7 million), as the Frankie & Benny’s owner prepares to reopen most of its sites within two weeks of restrictions being lifted, sending its shares soaring.

The pandemic-battered firm, which has permanently shut 250 restaurants and cut around 3,000 jobs, expects sales to recover quickly boosted by reduced sector capacity and pent-up demand for dining out.

After prolonged lockdown-led closures, eateries will be allowed to reopen from April 12 in the UK along with non-essential retailers.

“This year will be a transitional one, although soft signs point to significant pent-up demand which could support a strong recovery through summer/autumn,” Stifel analysts said.

Shares in the company, which owns around 400 restaurants and pubs across the UK, were up 6.1% at 116 pence by 0933 GMT after touching a high of 134.1 pence at 0833 GMT.

While all of its sites are shut for dine-in, the company said delivery and takeaway sales at Wagamama more than doubled from pre-pandemic levels for the four weeks ended February and were up five times for its leisure sites.

“The Capital raise announced today, alongside the debt re-financing announced last week, represents the last important step in our re-structuring process,” Chief Executive Officer Andy Hornby said.

The company, which had last year raised around 57 million pounds to weather the crisis, said it would raise fresh funds by issuing 95.9 million new shares to investors.

It will also issue 79.7 million new shares to existing shareholders by offering them five new shares for every 37 existing shares.

Both will be offered at a price of 100 pence per share - a 9.3% discount to the stock’s last closing price.

“The £175m fund raise makes sense to lower leverage and take advantage of any distressed acquisitions,” Jefferies analysts said.

The company posted an adjusted pre-tax loss of 87.5 million pounds for the year ended Dec. 27, compared with 47.9 million pounds a year earlier and said its near-term outlook remained uncertain due to restrictions. ($1 = 0.7210 pounds) (Reporting by Tanishaa Nadkar in Bengaluru; Editing by Anil D’Silva and Philippa Fletcher)