7th May 2020 15:15
(Alliance News) - Polypipe Group PLC on Thursday said it has raised GBP120 million through a share placing 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.
Deutsche Bank AG, London Branch and Securities Ltd acted as joint bookrunners for the placing.
Polypipe said it issued shares at a price of 445 pence each, representing a 7.7% discount to the closing price on Wednesday.
Shares in Polypipe were down 11% at 430.00p in London on Thursday afternoon, giving it a market capitalisation of GBP874 million.
Following the admission, the company will have 228 million shares overall.
Polypipe makes plastic piping systems for plumbing, drainage, heating and ventilation.
Earlier on Thursday, 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.
By Anna Farley and Evelina Grecenko; [email protected] and [email protected]
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