Engineer settles legal row and sets out to raise £7.5m

The Wakefield-based company intends to raise the funds through a placing of 19.2 million shares at a price of 39 pence per share, which it said will be used to recapitalise the company’s balance sheet and for general working capital.

It said the move, along with the restructuring of the business, would allow the company to capitalise on “significant opportunities in its key end markets.”

Redhall’s chief executive, Richard Shuttleworth, said: “We are delighted by the positive response from new and existing investors to this fund-raising, which has the potential to be transformational for Redhall by recapitalising our balance sheet.

“This fund-raising will give us the opportunity to deliver our strategy, which focuses on the company’s core strengths in niche manufacturing and specialised contracting.

“We see significant opportunities open to us in our key markets and the company is now well positioned for future growth.”

Earlier this year, Redhall announced it had accepted a lower than expected settlement offer of £2.1m from Vivergo, but analysts welcomed the deal saying it would close the matter.

Redhall said the full and final settlement of all claims fell considerably short of the amount the board believed was recoverable, but the group decided that further legal proceedings would have been a long and drawn out process, and the outcome and legal costs would have been uncertain.

There will be an exceptional charge of £7.7m before tax and legal and professional costs incurred in reaching the settlement.

The case dates back to Vivergo’s decision to terminate Redhall’s work at a new biofuels plant at Saltend in 2011 following delays.

Yesterday, analysts from Charles Stanley Securities said: “Redhall has raised £7.5m, subject to shareholder approval, through a placing which has been fully underwritten and one in which management themselves, have participated.

“With today’s announcement, the balance sheet is strengthened further with net debt expected to fall to £12.6m and £10.5m by September 2014 and 2015 respectively.

“With pressure on the balance sheet now eased, this will help allay investor concerns and allow management to focus on its trading activities.

“Accordingly, following a period of difficult trading, management changes, restructuring, litigation and balance sheet issues, we believe, Redhall has now turned a corner and can focus on the margin enhancing prospects in its engineering, nuclear and manufacturing divisions. We reiterate our buy recommendation.”

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