The one-for-two rights issue, at 40p a share, was accompanied by the warning that it is to write off half the value of Civil & Marine, its sea- dredged aggregates business, at a cost of pounds 60m. It is in discussions about the sale of the business - Minorco is tipped as a possible buyer - at about the written-down value.
The group has been struggling under a mountain of debt almost since it was created through the merger of Evered and Bardon at the beginning of 1991. Both had expanded rapidly, largely through bank borrowings, ahead of the merger and the slump in the market made it impossible to cut debt. The Evered name is to be dropped to reflect the importance of its US operations, and it will be called Bardon Group.
The rights issue will cut borrowings - including pounds 40m of preference shares - from pounds 346.6m, equal to shareholders' funds, to pounds 274.1m, or 76.5 per cent of shareholders' funds. If Civil & Marine is sold for pounds 60m, gearing will drop to about 60 per cent.
The rights issue, which is underwritten by Barclays de Zoete Wedd, had been expected, but the shares still fell 5p to 48p. Peter Tom, chief executive, said shareholders had been supportive. 'There is no doubt that we have superb assets and there is no doubt that, in the next five years, we will make good profits.'
He added that recovery would have a dramatic impact on the group's results. A 1 per cent rise in prices would add pounds 2m to profits, while a 5 per cent increase in volumes would add pounds 2.5m.
Volumes in the US are already sharply higher, spurred by infrastructure spending in Massachusetts and Maryland, while there are signs of improvement in some areas of the UK. But the group warned that pre-tax profits in the first half would be pounds 300,000, below analysts' expectations, although it has promised to maintain its full-year dividend at 2p a share.
The rights issue will dilute earnings by about 13 per cent.
Evered Bardon has been the subject of persistent bid rumours since its financial problems became clear, keeping its price high. RMC, the most obvious candidate, ruled itself out while the inflated share price and high debt deterred many others.
Mr Tom's family, which had a 57 per cent stake in Bardon, retains 15 per cent of the merged group. He is not taking up the rights on his 10 million shareholding, and it is unlikely the rest of the family will subscribe.