Steel maker eyes £50m rights issue

STRUCTURAL steelwork maker Severfield-Rowen yesterday said it was looking at a £50m rights issue, as it said it would take a £20.1m hit thanks to spiralling costs on a number of contracts.

In a review of 70 of the company’s contracts, Severfield-Rowen said it would take close to a £10m charge in relation to the 122 Leadenhall project, known as the Cheesegrater.

“The technical challenges of the site works on this contract are significantly greater than originally estimated and will require longer timescales and greater resources to complete,” it said yesterday.

Eight other contracts totted up cost overruns of £10.2m, Severfield- Rowen revealed.

The group added that “constructive discussions” were continuing with its lending banks, which have agreed to waive covenants that were due to be tested on 31 December.

As a result of the review, the steelwork maker said yesterday its expectations for the full year are now “somewhat lower”.

Former chief executive Tom Haughey resigned last month after the full extent of the cost overruns on the Cheesegrater project were unveiled, which sent its shares tumbling.

Shares in Severfield-Rowen closed down 5.1 per cent yesterday at 74.5p.