February 28, 2013 / 11:20 AM / 6 years ago

Severfield plans rights issue, amends debt facility

(Reuters) - Structural steelwork maker Severfield-Rowen Plc (SFR.L) 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.

Executive Chairman John Dodds said the loss for the year was primarily the result of “an unacceptable level of performance on a small number of contracts.

Severfield-Rowen recorded a pretax profit of 10.1 million pounds in 2011. Its main business is the designing, fabrication and erection of structural steelwork for construction projects, including warehouses, industrial buildings and power stations.

The company said last week that its expectations for 2013 and 2014 were now lower. In January it said Chief Executive Tom Haughey would step down after cost overruns at one of its projects in London.

Severfield-Rowen had to cope with lower construction demand, cost overruns at some projects, pricing pressures and delayed settlement of contracts.

The company said its order book in the UK stood at 209 million pounds at the end of 2012.

The company has lost about two-thirds of its value in the past year, leaving it with a market capitalization of about 64 million pounds as of Wednesday’s close.

($1 = 0.66 British pounds)

Editing by Joyjeet Das

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