Engineering group to raise £5.8m to support turnaround plans

ENGINEERING support services group Redhall is to raise £5.8m with a share placing to kick-start the second phase of its turnaround plan.

The shares will be placed at 5p, raising £4.8m with a placing and £1.0m with an open offer. Shares in the Wakefield group closed last night at 10.125p, but had been at 15p in March and 170p back in 2011.

It has also agreed a debt conversion with Henderson and HSBC, which will convert £3m of the Henderson Debt into shares.

Redhall’s chief executive Phil Brierley said: “We have made significant progress in the past year in transforming Redhall into a company focused on multi-disciplinary manufacturing and specialist services, which offer higher margins and lower risks.

“The proposals announced today, through restructuring the balance sheet and providing additional funding, will position Redhall to take advantage of the significant growth opportunities in our marketplace.”

Last year’s results showed a £10m drop in revenues to £103.2m with its operating profit before exceptional items down to just £140,000. In December it announced plans to focus on “higher margin manufacturing activities” with particular emphasis on the nuclear and oil and gas markets.

In May it sold it £30m-turnover engineering division to Cape for £6m, which was seen as a “significant step” in that strategy, reducing the group’s exposure to contracting.

The group’s restructuring has also seen it remove its old divisional structure and instead putting day-to-day management responsibility into individual businesses, and resetting the cost base of the Group to “more appropriate levels”.