SIG to raise £165m to improve liquidity, weather Covid crisis
SIG said on Friday that it plans to raise £165m through a placing and investment by US buyout firm Clayton, Dubilier & Rice (CD&R) to improve liquidity and help the building products distributor to weather the Covid-19 crisis.
The proposed capital raise comprises a £60m investment from CD&R and a firm placing and open offer of £105m. SIG will place around 347.9m shares at 30p each, which is a 10.6% discount to the closing share price on Thursday.
As well as improving liquidity, net proceeds will be used to "further resilience" against the effects of coronavirus pandemic and deliver the company's new strategy. They will also fund the unwind of various forms of government relief made available to the group during the Covid outbreak.
The company also provided an update on current trading, pointing to a gradual improvement throughout May and June, particularly in the UK and Ireland where branches continued to reopen in May as lockdown eased.
SIG said underlying revenue for May showed a steady recovery from its low in April. While this remained below the underlying revenue achieved in March, daily sales at the end of May were largely in line with March levels, it said.
"The improvement in revenues has continued at the start of June with the group trading in line with pre-Covid-19 levels. While revenues continued to be impacted by Covid-19 in some of the group's primary markets, the strength of trading is testament to the capability and resilience of our operating companies which returned to work quickly and effectively."
Still, SIG noted the improvement in trading has been influenced by factors such as re-stocking by customers as a result of previously subdued demand, and said it was unclear whether the performance will be maintained going forward "given the relatively short period of trading post-lockdown".
SIG said profitability improved "materially" in May, with operating losses in the UK "materially lower" than management had estimated when lockdown was imposed, and the rest of the group trading profitably.
"This has been driven by a combination of improved trading performance, particularly in the UK and Ireland, decisive cost actions by management and continued governmental support."
At 1250 BST, the shares were up 7.5% at 36.05p.