Galliford Try plans to raise £150m of new equity capital after being saddled with “additional financial obligations” following the compulsory liquidation of Carillion.
The housebuilding and construction group said it has “sufficient financial resources to meet its obligations, including the estimated impact of Carillion’s liquidation”.
However, “this would involve diverting capital away from the Linden Homes and Partnerships & Regeneration businesses, thereby reducing their ability to capitalise on the material growth opportunities these businesses would otherwise be well positioned to exploit”, so it is opting for the fully underwritten capital raise.
The company will therefore try and raise £150m of new equity capital in the coming weeks to further strengthen the group’s balance sheet.
It said that it would do this to “ensure that the group’s businesses can continue to pursue their respective growth opportunities that were set out in the ‘strategy to 2021’, which was announced in February 2017”.
The strategy ensures that the group has access to capital in order to be able to continue to grow, as well as demonstrating the group’s continued and enhanced financial strength and stability to Galliford Try’s shareholders, customers, suppliers and other stakeholders, and reaffirm the Group’s capacity to act as a leading partner on significant projects.
The group has £550m of debt facilities, comprising a £450m revolving credit facility, which matures in 2022, of which £100m was drawn as at 31 December 2017. It also has £100m of private placement notes due in 2027.
The group will continue with its current gearing policy of year-end net debt to net assets of no greater than 30%.
The group’s defined benefit pension obligations are well provided, with a fair value of plan assets as at 31 December 2017 of £248.0m and the present value of obligations at £250.7m, giving a balance sheet liability of £2.7m.
The capital raising has been fully underwritten by HSBC and Peel Hunt on a standby basis; Rothschild is acting as financial adviser to Galliford Try on the capital raising.
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