Firm to use money to eat into 拢436m debt pile
Kier has completed the 拢241m equity raise it only announced this morning, the firm has confirmed in a Stock Exchange announcement this afternoon.
It said 284 million shares have been issued at a price of 85 pence per share raising approximately 拢241m.
The firm only announced details of the plans at 7AM today with the lightning quick deal being completed less than nine hours after this morning鈥檚 announcement to the Stock Exchange.
In this afternoon鈥檚 update, Kier said the deal was dependent on the firm selling its Kier Living housing business to a private equity firm run by financier Guy Hands 鈥� widely expected to be wrapped up by the middle of June 鈥� and getting shareholder approval at its general meeting on 16 June which is expected to be a formality.
At a general meeting last Friday, more than 99% of its shareholders approved the Kier Living deal.
With the 拢110m expected from the sale of Kier Living, the firm is set to pump more than 拢350m into reducing its 拢436m debt pile.
Chief executive Andrew Davies, who along with the firm鈥檚 other directors have spent 拢300,000 between them on new shares, wants to get the business back to a net cash position within the next two to three years.
The firm had been forced into the move after coming unstuck following a four-year spending spree between 2013 and 2017 which saw it buy up rivals including May Gurney, Mouchel and McNicholas Construction, sometimes known as Green Macs.
In this morning鈥檚 announcement, Kier said: 鈥淲hilst these transactions built on and added to Kier鈥檚 leading positions in a number of attractive markets, they also left the business with a lack of strategic and operational focus, a complex and large cost base, and an over-leveraged balance sheet.鈥�
This afternoon, Davies said: 鈥淭his capital raise will provide Kier with the financial and operational flexibility to continue to pursue our strategic objectives, within our chosen markets, and to facilitate investment in the business to help drive sustainable, profitable organic growth and the achievement of our medium-term financial targets.
鈥淥n behalf of the Board, I would like to thank our existing shareholders for their continued support and welcome new investors who will become shareholders as a result of this capital raise.鈥�
Kier announced it would go to the markets for fresh equity at its interim results last month, where it said pre-tax profit in the six months to December 2020 was 拢9m from a 拢41m loss last time. Turnover was down from 拢1.9bn to 拢1.6bn.
A previous plan to raise money through a rights issue in November 2018 took three weeks to complete and was given a resounding thumbs down with just a third of shareholders taking it up.
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