Mounting concern about lending to the construction sector in the wake of Carillion’s collapse was one of the reasons behind a proposal by Kier (KIE) to raise £264m through a fully underwritten rights issue of 33 new shares for 50 existing shares at 409p, a discount of 34 per cent to the share price before the announcement.
This is the latest move in Kier’s debt reduction programme and will effectively leave the construction group with net cash on the balance sheet at the June 2019 year-end. Most of its banking facilities run until 2022, but a number of lenders have indicated that they will reduce their exposure to the sector. What’s more, potential customers are looking more and more towards service providers’ balance sheets. Owners of around a third of the shares have already indicated their intention to take up the offer.