Kier launches £241m fundraise

Kier Group is seeking to raise £241m through a shares issue, in a bid to dramatically reduce its debt. It will issue 284,049,829 shares at a price of 85p, a 17% discount to yesterday’s (12 May) closing price of 102.4p. Together with equity from the sale of Kier Living to Terra Firma, the group is targeting £351.4m in proceeds. Kier will use this to refinance its existing borrowing facilities. It will use £144.4m to pre-pay the outstanding balance of its 2017 revolving credit facility. A further £66.8m will go to paying off other loans and other fees with the facilities. It will retain £16.9m as cash reserves. Kier has extended facilities with lenders to January 2025, as part of its target of a net cash position within two to three years. The group aims to deliver £4bn-£4.5bn in revenue, with an adjusted operating margin of 3.5% in the medium term. In the six months to 31 December 2020 it delivered £1.9bn in revenue and an operating profit margin of 2.9%. Chief executive Andrew Davies said: “Today’s proposed capital raise represents the final milestone in the group’s strategy to simplify the group, to improve cash generation and to strengthen our balance sheet. “This capital raise will provide Kier with the financial and operational flexibility to continue to pursue our strategic objectives, within our chosen markets, and to facilitate investment in the business to help drive sustainable, profitable organic growth and the achievement of our medium-term financial targets.” Numis and Peel Hunt are joint bookrunners on the firm placing, placing and open offer. Rothschild & Co is the financial adviser.   To send feedback, e-mail emma.rosser@eg.co.uk or tweet @EmmaARosser or EGPropertyNews