(Alliance News) - SIG PLC on Friday said it intends to raise GBP165 million in a share issue, as it said it has started to see improvement in its trading and profitability.
The issue price of 25 pence each represents an 11% discount to the Thursday closing price of 33.5p each.
The stock was trading 14% higher at 38.08p each on Friday morning in London, giving it a market capitalisation of GBP226.0 million.
The building materials supplier said the fundraise includes an investment from American private equity firm Clayton, Dubilier & Rice LLC, which has agreed to subscribe for 240 million shares at the issue price for a total of GBP60 million. CD&R has also agreed to subscribe for shares as part of a planned placing and open offer, taking its total investment to GBP94 million.
SIG said the equity fundraise will be structured in two, inter-conditional tranches. A tranche of GBP60 million being placed firm to CD&R at a price of 25 pence per share, and a second tranche of GBP105 million comprising a placing and open offer at the same price.
The open offer will give qualifying shareholders the opportunity to subscribe for shares also at 25p each on the basis of 1 new share for every 4 existing shares.
In May, when plans for the fundraise was announced, the Sheffield-based company said CD&R 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. At the time, SIG said CD&R is expected to hold about 25% of the total enlarged issued share capital, adding that through a relationship agreement, CD&R will take two seats on the board.
The company's largest shareholder IKO Enterprises also agreed to participate in the fundraise.
The placing will be carried out by way of an accelerated bookbuild in which Jefferies International Ltd and Peel Hunt LLP are acting as joint bookrunners.
The new cash will be used to improve liquidity, repay GBP48 million of its outstanding loan notes and "provide further resilience against the effects of the ongoing Covid-19 pandemic" on its business.
SIG said it has reached an agreement with lenders to amend the terms of its revolving credit facility and the holders of its private placement notes agreeing to no amortisation or scheduled repayments until May 2023 in relation to around GBP234 million of its remaining facilities.
Separately, the company noted a gradual improvement in its performance throughout May and June 2020, particularly in the UK and Ireland. It said trading at the start of June was in line with pre-Covid-19 levels. Profitability has also improved "materially" in May with operating losses in the UK lower than management estimates as at the time of the start of the lockdown
By Ife Taiwo; ifetaiwo@alliancenews.com.
Copyright 2020 Alliance News Limited. All Rights Reserved.
SIG (SHI)