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BAM parent company in £216m cash call

Royal BAM, the Dutch parent company of BAM Construct and BAM Nuttall, this week released details of a rights issue intended to raise £216 million from its shareholders.

The bulk of the funds from the capital raising will be used to fund PPP projects, which the firm hopes will lead to work for both its construction and civils divisions. The balance will be used for general expenses.

The statement released to the Dutch stock exchange said: “Royal BAM Group intends to use approximately £130m from the net proceeds of the offering to make equity contributions to new and existing PPP projects. The investment of part of the proceeds of the offering in new PPP projects is an important element in order to facilitate growth.”

“Increased PPP activity may secure significant future revenues for other sectors of the group.”

The Dutch housing division proved to be a big drag on the group’s profitability in 2009, with losses, including write downs, of £230m from that division alone, while the UK divisions outperformed the group and made combined profits in 2009 of £54m.

The proceeds from the rights issue will improve the firm’s financial position, as it currently has net debt of £1.2bn. This compares to a current market capitalisation of £805m for the entire group.