SIG seeks £150m as virus hits demand

Insulation company’s deal gives US firm a 25pc stake

INSULATION GIANT SIG plans to raise £150m in new capital following a deal that would give US buyout firm Clayton, Dubilier & Rice a 25 per cent stake in the firm.

Sheffield-based SIG announced the capital raising after reporting “disappointing” results.

The firm, which scrapped its dividend and warned of a possible £500m hit to 2020 revenues, said March and April revenues fell by £139m as demand fell due to the coronavirus outbreak.

SIG also reshuffled its management team with the appointment of polymer products maker Low & Bonar’s Ian Ashton as its new finance chief. The company named Steve Francis as its CEO in February.

SIG said the prolonged impact of Covid-19 is anticipated to have significant consequences on its financial performance in 2020, both in terms of profitability and cash. The share sale will result in Clayton, Dubilier & Rice becoming the firm’s biggest investor with two board seats.

SIG’s chairman Andrew Allner said: “The 2019 results, albeit in line with January guidance, are disappointing. However, the board has taken decisive action to address this performance. A new CEO has been appointed and we have announced the appointment of a new CFO. In addition, we have new managing directors of the UK and German businesses. Under the leadership of Steve Francis, we have developed a new strategy which has been well received by customers, suppliers and colleagues.”

The firm reported a statutory pre-tax loss of £112.7m in 2019, down from a profit of £10.3m in 2018.

Mr Francis said: “The essence of our new strategy is re-connection with our people – employees, customers, suppliers and the communities in which we do business – we are a local, sales and service-driven business. We have also been navigating the effects of Covid-19. I am encouraged by how robustly we have operated in the most testing of circumstances and would like to thank all our people for their resilience and fortitude in the face of this pandemic.

Analyst Charlie Campbell at Liberum said: “SIG has announced a capital raise of £150m, with private equity house Clayton, Dubilier & Rice providing up to £85m. This will allow covenant waivers to prevent a breach in June.

“Trading in the last month was better than we expected with Europe already back to pre-Covid-19 levels.”