£100m headache for underwriters behind Kier Group rights issue

SUBSCRIPTION: Just over a third of shares offered in Kier are taken up

The underwriters of a £250 million rights issue by construction giant Kier Group have been left nursing a £100m headache after subscriptions fell well short of target.

Just 37.7% of the 64.5m shares offered in Kier – which has a significant presence in Scotland with recent contract wins in the healthcare and university sectors – found a buyer at the 409 pence issuing price.

Santander, HSBC, Citi and brokers Peel Hunt and Numis will now have to pick up around 40% of the outstanding share capital offered under the scheme, while the remaining shares have gone to sub-underwriters.

Shares in Kier were trading more than 4% lower yesterday morning at around 368 pence.

Kier is using the fundraising to strengthen its balance sheet.

The group explained risks associated with its net debt position had recently increased as banks reduced their exposure to the construction sector.

It said it could impact the ability of the group to raise cash.

The construction sector has been rattled by the collapse of Carillion in January, although its demise was ultimately a boon for Kier, which has since seen its order book reach record levels of £5 billion.

“Following the completion of the £250m rights issue, Kier enters 2019 with a strong balance sheet which puts us in an excellent competitive position,” group chief executive Haydn Mursell said.

Shares closed up 6.20p at 391.20p.

Following the completion of the rights issue, Kier enters 2019 with a strong balance sheet. HAYDN MURSELL, KIER GROUP CEO