Wolseley to raise £1bn by placing and rights issue

Company wants partner for US Stock business

Wolseley, the building supplies company, unveiled its much-anticipated restructuring plan yesterday, including a £1bn capital raising effort.

The group has struggled to reduce its £2.5bn debt as housing markets on both side of the Atlantic have nosedived.

To strengthen its capital base, the company is placing £270m of new shares with existing investors at 120p each, or a 27 per cent discount on Thursday's closing price. After a recapitalistion, a further £781m will be raised through a heavily discounted 11-for-five rights issue and the company has also renegotiated a €1bn (£890m) two-year debt facility.

Chip Hornsby, the chief executive, said: "Our markets have been hit hard in recent months and in response we have continued to take prompt and decisive action to reduce both costs and debt. Following the completion of the comprehensive financial restructuring, the balance sheet will be substantially strengthened."

Wolseley's strategy also includes plans to find a joint venture partner for its Stock business in the US, which accounts for 10 per cent of group revenues, or to sell out by August if a deal cannot be found. The Central and Eastern European businesses are also under review, so the group can concentrate on its core US plumbing and heating business and Western European operations.

Despite the drastic measures, investors remain wary. The group's stock, which has lost more than 70 per cent in the last 12 months, dropped to a 19-year low, closing down 15 per cent at 140.4p. The shares had already dropped by 8.7 per cent on Thursday, after Wolseley was forced by persistent rumours to acknowledge a rights issue was imminent.

A straightforward rights issue would instill greater confidence, according to City experts. "The complex structure reflects the fact that there have been too many rights issues in the market, and also hints that Wolseley was struggling to find sub-underwriters from its normal banks so had to go to its investors," one analyst said.

Wolseley has already cut 17,000 jobs and closed 713 branches since August 2007 and existing cost-saving plans are expected to deliver £572m per year. Financial results, published yesterday, emphasise the scale of the difficulties facing the business. Wolseley's revenues rose 3.2 per cent to £8.3bn in the six months to January, but trading profits dropped by a whopping 43 per cent to £182m, leaving an operating loss before tax of £880m after exceptional items including a £262m impairment charge. The group did not pay a dividend last year, and will not pay out at the half-year either.

The company's board issued bullish statements yesterday about the efficacy of the planned restructuring in meeting the challenges of the current environment. But further actions may still be necessary, if markets deteriorate even further than anticipated, the company said.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Relations Officer

£13000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Guru Careers: Executive Assistant / PA

£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

Confessions of a planespotter

With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

Paris Fashion Week 2015

The wit and wisdom of Manish Arora's exercise in high camp
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

Paul Scholes column

I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

From the Azteca to Vicarage Road with a million followers

Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

Khan ready to meet winner of Mayweather v Pacquiao

The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable