30th Nov 2018 15:24
LONDON (Alliance News) - Infrastructure services firm Kier Group PLC on Friday proposed to raise GBP264 million by the way of rights issue to accelerate its net debt reduction programme.
Kier intends to issue 64.5 million shares at a price of 409 pence each, representing a 34% discount on the closing middle-market price of 752.5p on Thursday.
The stock was trading trading 14% lower on Friday at 646.50p a share.
At the end of June, the company announced a debt reduction programme, which targets average month-end net debt of GBP250 million and a year-end net cash position for the year to the end of June 2021.
As at June 30, Kier's net debt stood at GBP185.7 million. It also reported an average month-end net debt for financial 2018 of GBP375 million.
"There has been a recent change in sentiment from the credit markets towards the UK construction sector, with various lenders indicating that they will be reducing their exposure to the sector," said Chief Executive Haydn Mursell.
"This has led to lower confidence among other stakeholders and an increased focus on balance sheet strength. The rights issue is intended to address these issues, better position Kier to continue to win new business and further strengthen our market leading positions," added Mursell.
Following the rights issue, Kier is targeting dividend cover of 5.0 times underlying earnings per share in financial 2019 and, thereafter, dividend cover of 2.5 times. The firm has previously been targeting a dividend cover of 2.0 times earnings.
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