Civils specialist now expected to announce 2020 results in next few days
Struggling civils firm NMCN has struck a refinancing deal worth up to £29m which will see it hand a controlling stake to a three-year-old business that specialises in rescuing stricken firms.
The listed contractor, which had previously warned on the consequences of not getting a refinancing deal signed off, said this morning’s news meant it was raising up to £29m in new equity with a new banking facility of up to £8.5m from current lender Lloyds.
NMCN, which is now set to release its delayed 2020 results within the next few days, said it will be given an immediate £10m in the form of bridging loan from Svella, which will be turned into new shares on completion of the deal due by early September.
NMCN added: “The company has received irrevocable undertakings from a majority of shareholders to approve the transaction at a general meeting.”
Svella was set up in 2018 by two former executives of transport and logistics firm Stobart Group “to identify and acquire controlling stakes in attractive but underperforming businesses and assets. It seeks to improve performance through operational improvement, an unwavering focus on financial performance, hands-on investment and proactive management.”
A further equity fund raising of up to £19m will consist of £14m from new investors, including Svella, who will now have a controlling stake in the company. A further £5m will be raised through a open offer to existing shareholders.
Lloyds will provide a £5m to £6m revolving credit facility as well as a further £2.5m in a term loan.
Svella chairman Andrew Tinkler said new chief executive Lee Marks, who joined from NG Bailey last month, will remain along with chief financial officer Alan Foster who joined from National Grid at the start of the year. Svella added that a new non-executive director will be appointed soon.
Marks admitted: “We have much to do and we need to learn from our past mistakes. However, with the appropriate financial foundations and support of our new investors in place, I look forward to leading the business into a new chapter.”
NMCN has been under pressure since last autumn when it announced former chief executive John Homer was stepping down with immediate effect last September and the following month issued the first of several profit warnings following a contract review which has seen an original expected pre-tax loss for 2020 of £15m balloon to £24m in the latest estimate published last month.
The firm has been hobbled by two loss-making water jobs – which it said would send the firm into the red this year as well – along with problems at its building arm.
In 2019, NMCN posted a pre-tax profit of £7.4m on turnover of £405m.