Severfield-Rowen launches rights issue as losses sting
STRUCTURAL steel group Severfield-Rowen today announced the launch of a £48m rights issue to reduce its borrowings.
The fully underwritten rights issues, which will raise £47.9m, £44.8m after expenses, comes as the group announced operating losses of £18.2m in the year to December 31, compared to profits of £14.2m the previous year.
Revenues for the year were down to £256.6m from £267.8m previously.
Severfield-Rowen said it has negotiated revised £35m facilities with its existing lenders following the seven for three rights issue, which is priced at 23p per share, a discount of 67.8% to last night’s closing share price of 71.5p.
Executive chairman John Dodds said: “Today’s rights issue puts Severfield-Rowen on to a sound financial footing. The events that led to the rights issue related to an unacceptable level of performance on a small number of contracts. Positive action is in hand to address these issues and improve performance.
“It is extremely encouraging that our shareholders, our lenders and our clients have shown strong support for the business, endorsing the group’s market leadership, longevity and underlying potential. With the balance sheet strengthened, we are confident that the group will move forward from here to achieve its long term growth objectives, both in the UK and India.”
Following the dismissal of chief executive Tom Haughey last month, the North Yorkshire-based business committed to undertake a review into why costs overran on a major project at 122 Leadenhall Street in the City of London.
