Troubled steel contractor looks to raise cash after 拢19.4m loss
Steel contractor Severfield-Rowen has launched a 拢47.9m rights issue aimed at stabilising the troubled business after reporting a huge 拢19.4m interim loss.
The firm, which has been hit by problems on a number of major contracts, including the Cheesegrater, where it has had to write-off 拢10m, said it was attempting to raise the money from shareholders in order to strengthen its balance sheet.
The rights issue, which has been offered at a share price 68.7% below its closing price yesterday, will see the value of existing shareholders鈥� stake in the business diluted by 70%. Severfield鈥檚 share price fell 10% on the news in early trading.
The firm said it had arranged a revised 拢35m credit facility with its lenders, which was however conditional on receiving the funds from the rights issue. The rights issue is fully underwritten.
The 拢19.4m loss for the year to December 31 2012 compares to a profit of 拢5.8m in 2011, and was recorded on revenues of 拢256.6m, down 4.2%. The firm wrote off 拢20.1m earlier in February on problem contracts, and said today that re-organisation to resolve the issues under new executive chair John Dodds, was continuing.
It said its order book was stable, at 拢209m.
Dodds said: 鈥淭hese results are clearly disappointing and are primarily a consequence of an unacceptable level of performance on a small number of contracts. The issues leading to this performance have been identified and positive action is in hand to effect improvement.
鈥淚t is extremely encouraging that our shareholders, our lenders and our clients have shown strong support for the business, endorsing the Group鈥檚 market leadership, longevity and underlying potential. With the balance sheet strengthened, we are confident that the Group will move forward positively from here to achieve its long term growth objectives, both in the UK and India.鈥�
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