Materials supplier will use cash to create 'greater resilience and financial flexibility' in the economic downturn
European building materials supplier SIG has confirmed plans to raise £341.3m from shareholders, following a 73% fall in pre-tax profit for 2008.
The firm intends to use the proceeds of the share issue to “create a more appropriate capital structure and provide greater resilience and financial flexibility” in the downturn.
It added that that the reduction in debt would “provide appropriate headroom under the covenant levels in SIG's existing debt facilities”.
The capital raising follows similar moves by Wolseley and CRH, which are seeking more than £2bn between them. French materials giants Lafarge and Saint-Gobain both also recently announced plans to raise £1.3bn each in rights issues.
The group also announced that profit for the year to 31 December 2008 had fallen to £33.1m, down from £124.3m in 2007.
This was largely attributable to exceptional costs of £104.2m, including redundancy costs and goodwill writedowns on acquired businesses.
Underlying pre-tax profit before exceptional costs for was down by only 2.0%, from £140.1m to £137.3m.
The group said that restructuring action taken in 2008 and 2009 was expected to deliver net cost savings of around £47m this year.
Chairman Les Tench said: “2008 was a challenging year for UK-based construction companies, as macro economic conditions took an increasing toll on building and construction activity.”
An EGM to approve the share issue is planned for 9 April.