The 40.1 million bonds, which will pay interest of 8 per cent before tax, are convertible into ordinary shares at 340p from 1996. But the company believes that the difference between the interest rate and the yield on ordinary shares - which, if it holds its 1993 dividend at 9p a share, is 4.2 per cent - means holders are unlikely to convert until the next century.
James Armstrong, Laing's finance director, said the group had opted for a convertible issue rather than a rights issue because it avoided the risk of dilution that may have occurred if the funds were invested not immediately in projects that provided sufficient return.
It has earmarked pounds 10m of the cash for expanding its housebuilding operations into the Midlands from the South-east and Scotland where it is already strong. It said that house reservations had risen by 20 per cent since the start of the year and prices in the South had stopped falling. It added that, while an acceptable level of profit is some way away, the housing market was now more favourable than for some years.
Laing is also keen to expand in overseas contracting - particularly in the Far East - and in infrastructure projects. It is considering bidding for the second road bridge over the Forth, north of Edinburgh, in a repeat of the partnership that is working on the second Severn crossing.
In the short-term, it will use the funds to strengthen its balance sheet. That is becoming more important in winning new business because of the growing need to provide performance guarantees on contracts.
The shares were placed by Barclays de Zoete Wedd but Laing shareholders are being offered a clawback on the basis of nine for every 20 ordinary or 'A' shares held. The ordinary shares closed up 1p at 267p, while the 'A's rose from 265p to 266p.Reuse content