Graham sale to raise less than forecast

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BTR will raise less than the market expected from the sale of Graham, its builder's merchant subsidiary. The 183p issue price announced yesterday implies a market capitalisation for the sector's fourth-largest company of pounds 209.8m, writes Tom Stevenson.

Analysts had expected the company to raise up to pounds 250m, but a spokesman for Graham said the City had misunderstood the volatile nature of its borrowing requirements.

He explained that the pounds 19m debt figure indicated by the company's pathfinder prospectus was lower than the average daily figure of between pounds 30m and pounds 35m because many trade creditors settled accounts at the end of the month before the balance sheet was drawn up. As a result, interest payments would be higher and profits lower than forecast.

Mark Stockdale of SG Warburg has pencilled in pre-tax profits for the year to December 1994 of between pounds 17m and pounds 17.5m, compared with last year's pounds 13.5m. On that basis, the offer price of the 115 million shares to be sold puts them on a prospective price/earnings multiple of 18.5. The group said 74.5 million shares would be placed with institutional investors, with a further 40.1 million subject to clawback under an offer for sale.

Had its shares been quoted for the whole of 1993 it would have paid a dividend of 4.6p, implying a yield of 3.1 per cent.

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