£250m cash-call sends Kier shares down 33pc
ShareS in construction group Kier plummeted yesterday as it went cap-in-hand to investors for extra cash.
Kier wants to raise £250m to pay down its £624m debt pile, as concerns surrounding the outsourcing industry since Carillion’s collapse at the beginning of the year have made banks less willing to lend to companies in the sector.
To raise the money it will create 64.5m new shares and sell them to investors at 409p each – well below its 752.2p close on Thursday.
This was to persuade investors to buy the shares, but the discount pushed the share price down by 32.5pc or 244.5p to 508p, wiping £238.8m off its value.
Chief executive haydn Mursell tried to reassure investors that the cash- call was not a sign the firm is in trouble.
he said: ‘The group is trading very well. We’re in line with our strategy and nothing has changed. But at the same time, in the past two months, everything has changed. We have five UK lending banks, and the bulk have decided they do not want exposure to the UK contracting sector.’
he explained meetings were held with its five lenders – Barclays, Lloyds, rBS, Santander and hSBC – early in October, when they told Kier they no longer wished to be its creditors.
rather than allow debt to be sold on to other asset managers, with whom the company may not necessarily have a good relationship, Mursell decided to pay down the sums to relieve the pressure.
The Government is also pressuring contractors such as Kier to pay its suppliers faster.
Key investors including Woodford Investment Management, Standard Life aberdeen and Charles Stanley have supported the fundraising.
Following Carillion’s crash, customers are looking more closely at their contractors’ balance sheets to make sure they can withstand a few wobbles. But the fundraising will mean that Kier’s dividend for 2019 will be cut.
Meanwhile shopping centreowner Intu stemmed further declines as it sold three properties – one to Sports Direct’s billionaire founder Mike ashley.
Shares in Intu had fallen as a consortium of investors dropped a £2.8bn takeover, saying they were hesitant amid tough market conditions in the retail sector. But Intu has rushed to prove it still has a plan, announcing the sale of Brierley hill in the West Midlands, York house in Nottingham, and the former BhS store in Derby for a combined £25.3m.
It said the three sites were not central to its future plan, and it would use the money to invest in new development opportunities. Shares dipped slightly by 0.4pc, or 0.5p, to 114p. ashley bought the Derby site despite being in dispute with Intu. he has vowed to close 17 Sports Direct stores in Intu’s centres after it refused to accept his proposals for rent reductions at four house of Fraser branches, following his rescue of the department store chain during the summer.
In an all-round poor day for the FTSe 250, Thomas Cook slid for the fourth day in a row, down 10.6pc, or 3.58p, to 30.1p. The travel firm issued a profit warning on Tuesday, blaming the summer heatwave for disappointing bookings, and yesterday received downgrades from brokers at both Berenberg and Credit Suisse.
Berenberg said that although the weather had undoubtedly had some effect, ‘ we fear that this is merely papering over the cracks of a structurally challenged business model’.
Thomas Cook’s woes caused competitor Tui to fall 6.6pc, or 79p, to 1117p.
The FTSE 100 slipped 0.8pc, or 58.71 points, to 6980.24.