Basilica Industrial: Underwriters hit as Kier £250m rights issue flops

Thursday 20 December 2018

Underwriters hit as Kier £250m rights issue flops

Bank underwriters are facing heavy losses on Kier group’s £250m rights issue after just over a third of shares were taken up.

Shares were trading at 385p yesterday, below the 409p issue price leaving the syndicate of five lenders facing losses even after £14m fees are taken into account.

When Kier chief Haydn Mursell announced the fundraising expedition to pay down its £650m debt mountain, existing shareholders were offered the chance to buy its stocks at a 34% discount, but this was wiped out as shares plummetted on news.

Haydn Mursell, Kier chief executive, 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.“

When the rights issue plan was unveiled last month, Kier said it had commitment for around 32% of the 64m shares to be taken up. This morning the firm revealed this had edged up to 38% of the issue.

Now underwriters have today to place shares with other institutional investors or be left with equity stakes in the business.

An analyst told the Enquirer: “This is clearly a set bank for Kier’s banks.

“It looks like the banks could be left holding a large chunk of shares in Kier for some time.

“Naturally this will put Kier’s management under more scrutiny going forward.”