Severfield plans rights issue, amends debt facility

Thu Feb 28, 2013 6:18am EST
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By Brenton Cordeiro

(Reuters) - Structural steelwork maker Severfield-Rowen Plc (SFR.L: Quote) said it planned a rights issue and had amended its debt facilities to shore up its finances after "a very difficult" 2012.

The company, which reported an underlying pretax loss of 19.6 million pounds ($29.7 million) for 2012, said it planned to raise a net 44.8 million pounds through the 7-for-3 issue.

The issue of up to 208.25 million shares will be priced at 23 pence each, the company said, representing a discount of 67.8 percent to Wednesday's close on the London Stock Exchange. The company has about 89.25 million shares outstanding, according to Thomson Reuters data.

Severfield-Rowen shares fell as much as 14.7 percent to 61 pence on Thursday before recovering to be down just 4.9 percent at 68 pence at 1055 GMT.

The debt refinancing and the rights offering put the company on much stronger footing and gave it a bit of headroom on its balance sheet, Peel Hunt analyst Dominic Convey said.

"They've basically dealt with the future investment requirements as well as short-term balance sheet needs."

The company said it would use the proceeds from the issue to strengthen its balance sheet. It also amended its revolving credit facility, which would provide it with 35 million pounds.

The company had net debt of 29.7 million pounds on December 31.   Continued...