Enodis, the kitchen equipment manufacturer, plans to raise £171.5m through the issue of shares and a bond in order to tackle its debt pile.
A deeply discounted rights issue should raise £71.5m, while a high yield bond would contribute another £100m. It will also refinance a further £300m of its bank debt.
Andrew Allner, chief executive, said the move would "take the stress out" of the company's balance sheet. Enodis said its debt, at some £370m, was "high" due to acquisitions made over the last three years and a steep fall in its earnings because of the downturn. The group was forced into a financial restructuring after its banks, Citibank and Royal Bank of Scotland, failed to syndicate a credit facility provided in March 2001.
"We're very comfortable with our business. The only issue was the balance sheet," Mr Allner said.
The three-for-five equity issue is at 50p – 46 per cent below Tuesday's closing price of 93p – and is fully under-written. Mr Allner said that if the company had raised the entire £171.5m through a high yield bond, it would have paid £11m a year in additional interest. Credit Suisse First Boston replaced Citibank as one of the company's bankers. The restructuring will cost Enodis £20m in fees.
"We have not gone out to raise the maximum amount in the rights issue, just what was appropriate," he said.
Enodis also reported first quarter figures, which showed a 10 per cent drop in profits to £14.2m. The company, which supplies fast food chains such as McDonald's, said that 2002 was unlikely to see any recovery in its markets. Enodis shares closed down 3.5p at 89.5p.Reuse content