Only 38% of new Kier shares sold in rights issue

20 December 2018 | By Neil Gerrard

Kier shareholders have taken up just 38% of the new shares issued by the contractor as part of a £264m rights issue aimed at paying down its debt, amid signs of faltering confidence in the sector.

Nonetheless, Kier will still receive £250m net cash proceeds for the rights issue because it was fully underwritten by institutional investors.

Now the institutions that backed the rights issue – reported by Sky News to include Citi, HSBC and Santander as well as brokers Peel Hunt and Numis Securities – will have to stump up for the rest of the new shares themselves.

Those investors had the opportunity to try to find subscribers for the the new shares not taken up through a "rump placing" but an announcement from Kier later this morning confirmed they were unable to do so.

The new shares were priced at 409p when the rights issue was announced, which represented a discount of nearly 50% on the prior day’s closing price.

However, shares in the company subsequently fell steeply and closed yesterday at 385p. In early trading this morning they fell to just over 337p, before recovering slightly to 377.8p.

In a statement accompanying the results of the rights issue Haydn Mursell, chief executive of Kier Group, said: "Following the completion of the £250m rights issue, Kier enters 2019 with a strong balance sheet which puts us in an excellent competitive position."

Kier’s net debt as of 31 October 2018 was £624m.


The second rights issue, when the shares were trading close to £198 in the last six years. Time for a change in the leadership

Tony Franklin, 20 December 2018

What happened to:
Turnover is vanity!
Profit is sanity!
Cash is King!
Kier was such a safe company under Colin Busby and Dugan Brand. Always kept £100k in the back for emergency’s. Invested in profitable housing from contracting. Now private house building has been slimmed down and the money spent on buying other contractors at low margins. If you do not make a profit then it does not produce cash, contractors only get a short term surplus by not paying sub contractors. I cannot see how the current strategy can work without having nvrstment in more profit making diversivication, take a look at whitbbred who understood they are in existence to make money not beer!!!

Roger page, 20 December 2018

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