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LONDON (Alliance News) - Styles & Wood Group PLC on Friday revealed a refinancing of its outstanding convertible preference shares, with a Henderson Global Investors fund and an investor backed by the big five FTSE 100 banks taking shares in the company after buying its outstanding convertible preference shares from a subsidiary owned by Royal Bank of Scotland PLC.
The refinancing strengthens the company's balance sheet, gives it a better capital structure and increases net assets by GBP3.6 billion, according to Styles & Wood, which said the move will cut cash outflows by GBP5.2 million and enable the it to consider acquisitions.
"The refinancing announced today positions Styles & Wood for growth at a pivotal stage in the Group's development. Over the last 12-18 months we have successfully implemented our diversification strategy to ensure that we are ideally placed to take advantage of the positive trends we are seeing in our core markets," Chief Executive Tony Lenehan said in a statement.
Shares in Styles & Wood were up by 53% at 91.00 pence on Friday morning.
SIG 1 Holdings, the RBS subsidiary, sold the GBP13.0 million of outstanding convertible preference shares to Henderson's AlphaGen Volantis Catalyst Fund Ltd and the Business Growth Fund for GBP5.8 million, with the two investors then converting GBP5.2 million of the convertibles into 554,666 new ordinary shares at a price of GBP9.375. That was a big premium to the company's share price at Thursday's close.
The Business Growth Fund, which is backed by Barclays PLC, HSBC Holdings PLC, Lloyds Banking Group PLC, Royal Bank of Scotland Group PLC and Standard Chartered PLC, was set up in 2011 to take equity stakes in small- and medium-sized businesses in the UK.
Styles & Wood issued a GBP2.0 million loan note to Henderson and the Business Growth Fund, with the proceeds to be used to redeem a further GBP2.0 million of the outstanding convertible preference shares, leaving GBP5.8 million in issue.
Henderson and the Business Growth fund have been conditionally issued with 740,000 warrants, which can be used to acquire shares at an exercise price of GBP0.75 per share. There has also been a conditional purchase of 364,000 nil cost warrants by the two investors for GBP182,300, equivalent to GBP0.50 per share.
Styles & Wood said 309,100 shares were placed in conjunction with the sale to the investors of the 1.1 million SIG 1 Holdings shares at GBP0.50 per share, giving them a combined 1.9 million shares in the company, equivalent to 27.4% of its equity.
Separately, Styles & Wood said it swung to a net profit of GBP198,000 in 2014, compared with a net loss of GBP725,000 in the prior year, with "positive trading seen in the second half of 2014" continuing in 2015.
"Our opening order book for 2015 was 20% ahead of 2014 and at the end of May remained significantly ahead of the prior year and alongside the improvement in gross margin is a positive endorsement of the Group's diversification strategy and selective market focus," Lenehan said.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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