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(Alliance News) - SIG PLC on Friday said it appointed new finance head and expects to launch a fundraising in the coming weeks as part of its new growth strategy after it swung to loss in 2019.
SIG said it has explored its wider funding options and is intending to raise GBP150 million in new equity in the coming weeks to strengthen its capital structure and enable the management team to deliver its new growth strategy.
American private equity firm Clayton, Dubilier & Rice LLC has agreed to invest up to GBP85 million, with a guaranteed minimum of GBP72.5 million, conditional on GBP150 million of equity being raised and satisfactory amendments to the company's financing facilities being agreed.
The equity offer will be structured in two, inter-conditional tranches, SIG explained. A tranche of GBP60 million being placed firm to CD&R, at a price of 25 pence per share, and a second tranche of GBP90 million, offered to a broader range of investors and incorporating a pre-emptive offer, in which CD&R will invest up to GBP25 million.
SIG shares closed flat in London on Thursday at 28.00p each, giving it a market capitalisation of GBP165.6 million.
While the exact percentage holding will be determined in due course, SIG said CD&R is expected to hold about 25% of the total enlarged issued share capital. Through a relationship agreement, CD&R will take two seats on the board of SIG, it said.
Turning back to results, the building products supplier reported a 9.0% decline in revenue in 2019 to GBP2.08 billion. On a like-for-like basis, sales declined by 7.6%.
SIG said its performance was hurt by market share losses in UK and Germany due to poor execution of transformation initiatives which, it believes, disconnected the business from its customers, suppliers and its front-line colleagues.
As a result, the company swung to pretax loss of GBP112.7 million in 2019 compared to GBP10.3 million profit a year prior. The swing to loss also reflects GBP128.3 million of "other items", including impairment of goodwill and intangibles.
SIG cut its dividend to 1.25 pence, having paid a 3.75p per share payout in 2018.
"The 2019 results, albeit in line with January guidance, are disappointing. However, the board has taken decisive action to address this performance. A new chief executive has been appointed and, this morning, we announced the appointment of a new chief financial officer," said Chair Andrew Allner.
SIG named Ian Ashton as permanent CFO and Simon King as a non-executive director, both with effect from the start of July.
Ashton replaces Kath Kearney-Croft, who assumed the role of Interim CFO on February 25. Ashton will join SIG from Low & Bonar PLC, where he has served as CFO. Prior to that, he was finance head of Labviva LLC, a US-based technology company.
Meanwhile, King has over 35 years' experience leading international businesses, SIG said. Most recently he served on the Travis Perkins PLC executive board and held the position of chief operating officer of Wickes.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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