SIG confirms £150m raise plans as firm swings to loss
Building products supplier SIG this morning confirmed plans to raise £150m from a share issue after the firm swung to a loss in 2019.
The company said that investment firm Clayton, Dubilier and Rice (CDR) had agreed to invest £85m into SIG, and would take two board seats as a result.
The announcement initially prompted shares to jump, before falling back to sit 0.3 per cent up as of mid-morning.
The figures
SIG said it made a pre-tax loss of £112.7m in the last financial year, swinging from a profit of £10.3m in 2018.
The firm said that a nine per cent fall in underlying revenue to £2.1bn, caused by a loss of market share in the UK and Germany, was responsible for the swing.
Earnings per share also fell back 90 per cent from 6.3p to 0.6p.
In an attached trading update on the impact of coronavirus on the firm, SIG reported that revenues in March and April had fallen 37 per cent – £138.9m – on the previous year.
The firm said it had cash resources of around £135m, with net debt standing at £114.1m.
As a result of the challenging financial situation, SIG’s board has decided against paying out a dividend this year.
Why it’s interesting
Acknowledging that the previous year’s results were a disappointment, the firm said it was now ready to strengthen its capital structure through a placing.
The raising will be structured in two parts, with the initial £60m being placed to CDR at 25p per share.
The second £90m tranche would be offered to a broader range of investors and incorporate a pre-emptive offer, in which CDR would invest up to £25m.
CDR has guaranteed investment of £72.5m at the least, condition of a successful raise of at least £150m.
IKO, SIG’s largest shareholder, said that it was fully supportive of the strategy and equity raise.
What SIG said:
Chief executive Steve Francis said: “Since my appointment as CEO on 25 February, we have been developing a new strategy and organisational model which focuses on people, growth and active industry leadership.
“After nearly a decade of contraction, which has included disposals, rationalisation, debt and cost reduction, it is now time to focus on how to grow SIG.
I firmly believe that our new strategy for growth will provide the basis, not only for the restoration of profit and cash conversion, but also serve as a foundation to play a leading role in our industry in the years to come.