Construction firm Kier is seeking to raise gross proceeds of £264m through a rights issue, claiming that the move will put the company on a safer footing “in light of tighter credit markets and more stringent tender pre-qualification requirements”.
Announcing the plans late on Friday, Kier said that the board believes the risks associated with its net debt position have recently increased, in part because “a number of lenders have indicated an intention to reduce their exposure to the construction and related sectors, which may affect the confidence of other credit providers and liquidity in the medium term”.
“There has been a recent change in sentiment from the credit markets towards the UK construction sector, with various lenders indicating that they will be reducing their exposure to the sector,” said chief executive Haydn Mursell. “This has led to lower confidence among other stakeholders and an increased focus on balance sheet strength. The rights issue is intended to address these issues, better position Kier to continue to win new business and further strengthen our market leading positions."
However, the move has led to a significant fall in the company's share price, from 700.5p on Friday just ahead of the announcement, to 510p at the start of trading on Monday. Despite an early rally in morning trading, the price had slipped to 499.6p by 10.30.
Credit concerns drive Kier rights issue
Contractor Kier launches rights issue “in light of tighter credit markets”; share price plunges
