Bank underwriters are facing heavy losses on Kier group’s £250m rights issue after just over a third of shares were taken up.
Shares were trading at 385p yesterday, below the 409p issue price leaving the syndicate of five lenders facing losses even after £14m fees are taken into account.
When Kier chief executive Haydn Mursell announced the fundraising expedition to pay down its £650m debt mountain, existing shareholders were offered the chance to buy its stocks at a 34% discount, but this was wiped out as shares plummetted on the news.
Mursell said: “Following the completion of the £250m rights issue, Kier enters 2019 with a strong balance sheet which puts us in an excellent competitive position.“
When the rights issue plan was unveiled last month, Kier said it had commitment for around 32% of the 64m shares to be taken up. This morning the firm revealed this had edged up to 38% of the issue.
Now underwriters have today to place shares with other institutional investors or be left with equity stakes in the business.
An analyst told the Enquirer: “This is clearly a set bank for Kier’s banks.
“It looks like the banks could be left holding a large chunk of shares in Kier for some time.
“Naturally this will put Kier’s management under more scrutiny going forward.”
from Construction Enquirer https://ift.tt/2SdyAXd