7th May 2020 12:17
(Alliance News) - Polypipe Group PLC on Thursday announced an approximately GBP120 million share placing and said it has been operating at around 70% below normal demand as a result of the Covid-19 pandemic.
Polypipe makes plastic piping systems for plumbing, drainage, heating and ventilation.
It will use the placing proceeds to strengthen its balance sheet, shrink overall debt and lower its leverage. The funds will help the company avoid breaching its bank covenants or needing more waivers, which may not be agreed, it noted.
"The net proceeds of the placing will enhance the operating strength of the group and enable continued organic investment in exciting new products and systems," Polypipe added.
Deutsche Bank AG, London Branch and Securities Ltd are acting as joint bookrunners for the placing.
Separately, Polypipe said it had "been operating at approximately 70% below normal demand, supplied mainly from existing stock, driven by urgent NHS and care-related activity as well as some ongoing infrastructure and commercial work, and essential repair, maintenance, and improvement" in the wake of the pandemic.
It has taken steps to cut costs and conserve cash, including furloughing around 60% of its workforce, curtailing capital and discretionary expenditure, and standing down agency staff and consultants.
On top of this, Polypipe is in negotiations to agree temporary lease terms with some providers as well as a return to normal, non-early payment terms with some of its suppliers.
Polypipe has cancelled its final 2019 dividend, cut salaries and fees for directors, and agreed to defer some payments to HMRC.
The company also has obtained a further GBP50 million twelve-month revolving credit facility from its banking group on top of its existing GBP300 million facility. It has been given a temporary waive for some of its facility requirements and suspension of its June 2020 quarterly leverage covenant test.
Shares in Polypipe were down 3.3% at 466.00 pence in London on Thursday at midday.
By Anna Farley; [email protected]
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