Woodford leads push for change to Kier’s management team
KIER GROUP shareholders are reportedly working to change the construction company’s management team after a difficult six months in which investors shunned a fundraising attempt.
The futures of Haydn Munsell, the chief executive, and Bev Dew, the finance director, may be at risk, as Woodford Investment Management, which owns 16pc of the firm, is trying to replace one or both of the pair.
Neil Woodford, who runs the investment group, is said to be pushing for their exits, according to Sky News. Other large shareholders are apparently on board with Mr Woodford’s wishes, but no changes are thought to happen in the short term unless Philip Cox, the chairman, finds successors.
Candidates would apparently have to come from outside the company.
Woodford has increased its holding of Kier stock in the past few weeks, which is said to add credibility to its call for changes to the executive team.
The Kier management team suffered embarrassment after failing to win shareholder support for a fundraising effort in December last year. Funding was required after management announced its net debt increased from £186m in June to £624m in October.
The rights issue did not go to plan as buyers for just £99m of £264m available stock came forward.
The remaining two-thirds was absorbed by Numis Securities, Peel Hunt, HSBC, Citigroup and Santander, which had underwritten the round. This was partly offset by the £14m of fees paid by Kier, overall bringing them £250m of new financing.
Afterwards, Mr Munsell said: “Kier enters 2019 with a strong balance sheet which puts us in an excellent competitive position.” Kier shares fell by as much as 13pc to 335 pence, the lowest price in 15 years, following the rights issue, after falls of 64pc already seen in the year. The price has since started to recover.
The firm announced the rights issue in November after it struggled to get lending from banks wary of lending to low-margin builders.
These worries were stoked by the collapse of Carillion in January of last year, which cost taxpayers £148m.
The firm folded with debts of £1.5bn and 420 outstanding public sector contracts.
Kier Group is one of the UK’S largest construction firms, employing 16,000 people. It works on infrastructure projects including HS2 and Crossrail.
The government outsourcing sector has faced major challenges since Carillion went bust in January 2018.
Debts of more than £500m at rival Interserve caused shares to fall in November, before rescue talks were announced in December.
The company lost three-quarters of its value after announcing the talks, leaving shares to hit a low of just 6p, from highs of over £7 a few years ago.
At that price, the 75,000-employee company was worth less than £10m. Interserve said it planned to announce details of a restructuring early this year.
Laing O’rourke agreed refinancing terms with creditors this week. Overall, growth in the construction sector fell to a three-month low in December.
As a result of the trouble in the industry, banks have become more hesitant about lending to firms.
Neither Woodford nor Keir would comment this weekend.
Other shareholders contacted by
The Telegraph were not available for comment.