In the wake of a devastating earnings warning, a London-listed construction materials company that investors saved during the epidemic is thinking about making another cash call. Investors came to the company’s rescue during the pandemic.
SIG, which now has a market value of little more than 300 million pounds, is contemplating doing an equity raise with the intention of raising up to roughly half of that amount.
According to sources, it may look for new finance in the range of one hundred million to one hundred fifty million pounds.
This past weekend, the corporation stated that it did not comment on “market speculation,” while sources emphasized that no decisions had been made about the strengthening of its balance sheet.
Under the guidance of his predecessor, Steve Francis, who had previously served as the head of Patisserie Valerie’s parent business, SIG was able to raise funds during the epidemic. Gavin Slark, the chief executive officer, is in charge of the organization.
Clayton Dubilier & Rice (CD&R), which is one of the largest buyout firms in the world, owns a significant minority position in SIG, making it a rare occurrence in the London market.
Around the year 2020, when the COVID-19 outbreak compelled a large number of publicly traded corporations to look for new sources of funding, CD&R, the company that controls the grocery chain Morrisons, acquired a 25% share in SIG.
As part of an overall equity-raising effort that totaled approximately £150 million, it made an investment of £85 million.
Subsequently, the private equity group boosted that interest to 27%, and as part of a connection agreement with SIG, it added two directors to its board of directors.
This past weekend, it was not obvious whether CD&R was in favor of a move to enhance its financial position by means of a rights issue or some other type of equity-raising.
Additionally, CD&R, which owns businesses in the United Kingdom that are involved in the outsourcing and marketing services industries, declined to comment.
Some of the executives working for the buyout company in London include Sir Terry Leahy and Sir Dave Lewis, both of whom were once in charge of Tesco.
It has been reported that SIG, a company that sells insulation and other building goods for use in residential and commercial property, is contemplating a variety of different possibilities, one of which is the sale of shares.
It is also subject to a bond maturity in the year 2026, and the firm is working to refinance that bond as one of its major financial goals.
In a trading report that was provided one month ago, SIG predicted that the full-year underlying operating profit would be between twenty and thirty million pounds, which was lower than what the market anticipated.
“While market conditions remain challenging in a majority of areas, the board continues to expect its strategic and commercial initiatives to benefit medium-term margin and profit growth, also supported by meaningful operating leverage when market volumes recover,” it stated at the time of the announcement.
The company went on to say that “subdued demand” had been “most notable in the French and German markets, as well as in the end markets of our UK Interiors business.”
SIG is due to report the first half of the year’s results on August 6, but there may be pressure on the business to provide more details as early as Monday morning.
Over the course of the past year, the company’s stock has experienced a decline of more than ten percent.