viewKier Group PLC

Kier Group CEO steps down after disappointing rights issue as firm maintains guidance

"The board believes that, following the completion of the recent rights issue, now is the right time for a new leader to take Kier forward to the next stage of its development,” chairman Philip Cox said

The company remains on track to cut debt and report a net cash position for the year

Kier Group PLC (LON:KIE) chief executive Haydn Mursell has stepped down from the construction firm with immediate effect following a disappointing rights issues.  

Chairman Philip Cox has been appointed executive chairman and he, along with finance director Bev Dew and chief operating officer Claudio Veritiero, will oversee the company’s operations until a new chief executive is found.

"The board believes that, following the completion of the recent rights issue, now is the right time for a new leader to take Kier forward to the next stage of its development,” Cox said in a Tuesday statement.

“The board would like to thank Haydn for his contribution during eight years on the board, firstly as finance director and then as chief executive.”

Last month the company revealed that just 38% of its rights issue shares were taken up by shareholders, although the underwritten cash call still net the firm £250mln.

Kier was looking to issue 64.5mln new shares at 409p each in the 33-for-50 rights issue but just 24.3mln of the shares were taken up.

READ: Kier Group shares drop as just 38% of rights issue shares taken up, but firm still to net £250mln

Joint bookrunners – Peel Hunt, Numis, Citigroup, HSBC Holdings, Banco Santander –were unable to find subscribers for the remaining stock at the rights price so had to take them on themselves as underwriters.

The rights issue was held to cut debt and better position Kier in light of tighter credit markets and more stringent tender pre-qualification requirements.

Kier maintains full-year guidance

In a separate first-half trading update on Tuesday, the company said it remains on track to report a net cash position for the year ending June 30 following the cash call.

At the end of December 2018, net debt stood at £130mln, compared to £239mln a year ago. The average month-end net debt for the six months to the end of December was £370mln, down from £410mln in the previous half.  

“The board is confident that the group will meet its FY19 expectations, with the full-year results being weighted towards the second half of the financial year, as usual,” the company said.

The group expects the full year to be “earnings and cash flow neutral” as the costs of implementing its restructuring programme in the first half exceeded savings by £10mln.

However, Kier said it has 100% visibility of forecast revenue for the year and an order book at more than £10bn after winning new contracts in its infrastructure and buildings businesses.

Contracts included at £70mln utility services deal a £500mln deal for building projects and a £1.5bn framework for three lots on North West Construction Hub public sector projects. 

Quick facts: Kier Group PLC

Price: 85.55 GBX

Market: LSE
Market Cap: £138.69 m

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