LONDON (ShareCast) - (Sharecast News) - Kier only received 37.66% acceptance for its rights issue, though as the fundraising was fully underwritten the construction group will receive the £250m net cash proceeds by 28 December.
The 33-for-50 rights issue, priced at 409p per share, was fully underwritten by Numis Securities, Peel Hunt, Citigroup Global Markets, HSBC and Banco Santander, which all will need to try and find buyers or stump up the cash themselves.

Kier chief executive Haydn Mursell said following completion of the rights issue, the company "enters 2019 with a strong balance sheet which puts us in an excellent competitive position".

Last month the company said it was raising the cash due to the risks associated with the perception by prospective clients that its net debt was too high. Not only were lenders indicating plans to reduce exposure to the construction and related sectors, but potential clients and customers were said to be "increasingly" demanding service provider have a strong balance sheet and pressure was also coming to shorten supply chain payment terms.

Kier said it would use the money to target a year-end net cash position, with an annualised average net debt below total EBITDA.

Broker Peel Hunt, one of the joint bookrunners and joint underwriters on the rights issue, said in a note on Thursday that it assumed management "will use £70m to selectively invest in the supply chain, with the remaining proceeds reducing net debt".

It argued that the rights issue mitigates the risks cited by Kier, but "potentially accelerates the pace of work winning (through greater competitive advantage), as well as enhancing the terms and conditions with key supply chain partners".

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