Severfield plans rights issue after loss

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Structural steelwork maker Severfield-Rowen is planning a rights issue priced at a 67.8 per cent discount to the company’s closing stock price on Wednesday, sending its shares down by as much as 15 per cent in early trading.

The Thirsk-based company, which also reported an underlying pre-tax loss of £19.6m for 2012, said it plans to raise a net £44.8mthrough the seven-for-three issue.

The issue of up to 208.25 million shares would be priced at 23p each, the company said. The shares closed at 71.5p on the London Stock Exchange on Wednesday.

Severfield-Rowen said it would use the proceeds from the issue to strengthen its balance sheet. The company had net debt of £29.7m at the end of last year.

Executive chairman John Dodds said the loss for the year was primarily the result of “an unacceptable level of performance on a small number of contracts.”

The company, which recorded a pre-tax profit of £10.1m in 2011, said in January that chief executive Tom Haughey would step down after cost overruns at one of its projects in London.

Severfield-Rowen said last week that its expectations for 2013 and 2014 were now lower.

The company’s shares were down 6.3 per cent at 67p this morning.