British building supplies company Wolseley raised £1.05 billion in a fully-underwritten discounted share sale to rebuild its debt-laden balance sheet, sending its shares to an 18-year low.
Wolseley, grappling with market crashes in Britain and the United States, said on today it would raise £781 million in a 11-for-5 rights issue and £270 million in a placing, as it posted a first-half loss of £965 million.
Wolseley, which has cut around 17,000 staff and shut 713 branches since August 2007, said it had decided to focus its business in Britain, Ireland, Scandinavia and France France and on supplying plumbing and heating equipment in North America.
It is looking to exit its US building materials business, Stock, by August 2009 or find a joint venture partner, while in Central and Eastern Europe the company said it had begun a strategic review of its operations.
“In recent months the weakening in the group's trading environment has intensified as a result of the turmoil that continues to affect global capital markets,” the company said.
Its shares, which have lost 90 per cent of their value since early 2007, were down 15 per cent at 141 pence by 9.38am, having earlier fallen to an 18-year low at 131.3 pence.
It is raising £270 million by placing 225 million new shares with institutional investors at 120 pence, a 27 per cent discount yesterday's close. It will then hold a right issue on an 11-for-5 basis at the equivalent of 40 pence per share, a 76 per cent discount, to raise £781 million.
That 40 pence price is also 47 per cent below the theoretical ex-rights price, Wolseley said.
Wolseley said it would not invest in expansion in France until its financial performance improves. “The group needs to prioritise its resources in a challenging economic environment.”
Wolseley said revenue rose 3.2 per cent to almost £8.3 billion in the six months to end-January but its trading profit slid 43 per cent to £182 million, largely as a result of losses at the US business earmarked for disposal.
Its £965 million first-half pretax loss was made after deducting £262 million in restructuring costs and £800 million of writedowns stemming from acquisitions.
The company made a first-half pretax profit of £79 million in 2008-08. The group said it would not pay an interim dividend.
Reuters