Int is plan, Wolseley unveiled a combination of a share placing and deeply discounted rights issue, both underwritten.
Written by Kevin Doyle
Desperate times often call for implementation of bold measures and UK-based Wolseley did just that on Friday. The company launched a £1bn cash-raising move to strengthen its balance sheet, unveiling a combination of a share placing and deeply discounted rights issue, both underwritten.
Wolseley is placing 225m new shares at 120p, raising £270m, and is asking investors for a further £781m through an 11-for-five rights issue at 40p a share. The program will raise £1bn after expenses.
With locations in 27 countries, Wolseley is the world’s largest specialty trade distributor of plumbing and heating products to professional contractors and a leading supplier of building materials to the professional market.
Its shares closed down 15 percent at 140.4p, an 18-year low, making them the biggest faller in the FTSE 100 share index yesterday.
The fundraising is the latest in a series of moves Wolseley has undertaken to ride out the slump that has hit construction markets in Europe and the US. Over the past 18 months the company has cut its global workforce by 17,000 and closed some 700 branches. It is looking to dispose of its Stock business in the US and is reviewing its exposure to central and eastern Europe.
"We are confident the measures announced today represent a comprehensive package to strengthen the balance sheet and position the group for the future," Chief Executive Chip Hornsby said after the group announced the measures and posted a first-half loss of 965 million pounds.
Hornsby said investors were fully supportive of its plans to raise 781 million pounds in an 11-for-5 rights issue along with 270 million pounds in a placing at a 27 percent discount to Thursday's close.
Finance Director Steve Webster said the company had support for the fundraising from institutional investors including U.S. holders and some of the group's major shareholders.
"To raise a billion the way we have done in the current markets and to have strong demand from key shareholders to take up the firm placement and get involved in the rights issue is a gesture of tremendous support," Webster told reporters.