£250m cash-call sends Kier shares down 33pc

Daily Mail - - City&finance - by Lucy White

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.

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