Severfield goes for £48m rights issue (From The Northern Echo)
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Severfield goes for £48m rights issue
10:15am Friday 1st March 2013 in Business News
By Andy Richardson
PROFITS HIT: The distinctive Cheesgrater building in London, centre, caused problems for Severfield-Rowen
A FAMOUS structural steel firm has turned to shareholders to help cover a £23.3m pretax loss brought on by a string of loss-making contracts.
Severfield-Rowen, based in Dalton, near Thirsk, North Yorkshire, has started an urgent overhaul of how it bids for work after suffering losses on some landmark building projects.
The £48m rights issue is designed to build a solid foundation for Severfield after bosses admitted the latest set of results were disappointing.
Last month, the company launched an inquiry after warning its profits would be hit by budget overruns on construction of 122 Leadenhall, London, commonly known as the Cheesegrater building.
The inquiry looked at all of the firm’s major works and found eight problem contracts which had been underestimated.
Its chief executive Tom Haughey was ousted and Severfield’s share price plunged.
The UK’s largest steel fabricator recently consolidated its three main trading businesses into one firm to reduce costs.
A trading update yesterday, revealed the extent of the firm’s woes. It included a pretax loss of £23.3m on sales of £256m – down from £267m in 2011. However, a £209m order book and ongoing support from its backers has given Severfield cause for optimism.
“These results are clearly disappointing and are primarily a consequence of an unacceptable level of performance on a small number of contracts,” said executive chairman John Dodds.
“The issues leading to this performance have been identified and positive action is in hand to effect improvement. It is extremely encouraging that our shareholders, our lenders and our clients have shown strong support for the business, endorsing the group’s market leadership, longevity and underlying potential.
“With the balance sheet strengthened, we are confident that the group will move forward positively from here to achieve its long term growth objectives, both in the UK and India.”
Severfield, which employs about 600 workers in the North, gained an international reputation after it helped to build London’s Shard, Europe’s tallest building, as well as the main London Olympics stadium, velodrome and Arcelor Mittal Orbit viewing platform. It also played a part in Arsenal FC’s Emirates Stadium, Wimbledon’s retractable Centre Court roof and Heathrow’s Terminal Five and Terminal Two developments.
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