LONDON (Alliance News) - Lamprell PLC Friday said its performance so far in 2014 remains in line with expectations, as it launched a rights issue of shares to raise roughly USD120.3 million and signed commitments for a new USD350 million banking facility.
The engineering and contracting services business said that it plans to raise the cash through a 5-for-16 rights issuance of 81.4 million shares at 88 pence per share, a 40% discount to its closing price Thursday. The company is currently trading down 3.8% at 140.50 pence.
Lamprell said it plans to put USD60 million of the cash towards a yard investment programme, which includes the improvement of its systems and operating facilities, with an expected payback period of three to four years.
The company also said USD10.6 million will be used to repay, in full, its borrowing under its term loan facility B and provide a stronger platform to refinance its existing debt facilities.
It said that it has recently signed commitments for a new secured, fully-underwritten banking facility with three of its core lending banks. Lamprell said the proposed funding arrangements will replace its existing funding facilities with a USD350 million facility, while the lending banks have agreed to try to arrange a further USD250 million bonding facility which may be used by the company for project bonding requirements under new contract awards.
The company said the remainder of the funding, after fees and expenses, will be used to strengthen its balance sheet with improved capital structures.
Lamprell separately said it has performed well since the start of 2014, in line with expectations, and has delivered two major projects on schedule and on budget, providing a jackup rig to its largest client, National Drilling Co, in February and creating a new production, utilities and quarters deck for Nexen Inc during April.
The company said it has also seen strong demand for its products and services in its core markets during the period, despite market conditions remaining competitive, and recently secured a major USD390 million order contract with Ensco International GmbH.
It added that it remains in advanced discussions with a number of prospective clients for new projects, and it expects to convert these opportunities into booked work shortly.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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