Services giant Imtech NV has announced a £434 million rights issue after increasing the expected loss on Polish projects to £130m and predicting another £130m of write-offs on German projects.
Money raised from the rights issue will be used entirely to reduce debts to make the group’s financial structure more robust.
The Dutch firm yesterday announced that its chief executive René van der Bruggen was retiring as the firm faced a “difficult and challenging” time. The firm said his retirement was “in line with the original plan”.
New chief executive Gerard van de Aast said the writedowns in Poland and Germany “require a tightening of the quality and effectiveness of our business controls”.
“Our financial structure also appeared to be lacking in robustness,” he added. “By the intended strengthening of our equity and the measures that have been taken, we are laying a solid foundation for the future.”
Imtech UK chief Paul Kavanagh this month told CN the UK business was “unchanged” by the Polish writedown, which has since expanded from £86m to an expected £130m.
The parent group said “possible irregularities” had taken place in Poland, leading to a suspension of management and a forensic investigation. The writedown relates to the Adventure World Warsaw project and other Polish projects.
The German business’ chief executive and chief financial officers have stepped down because of the Polish issues, and the new management team has found “valuation problems with its projects and debtors in Germany”.
A further expected write-off of £130m has been estimated for the Germany business, due to a write-off on money owed by debtors and a lower estimation of work in progress.
Imtech NV said that, given the necessary strengthening of its balance sheet, it “no longer strives for the targets set for revenues and margins for 2015”.
Instead, the priority in 2013 and 2014 will be on “sharpening the operational execution of business processes”, with particular focus on project management, working capital management and cash generation. Imtech foresees no acquisitions during these years.
The rights issue is being led by ING and Rabobank as joint global co-ordinators.
A temporary ‘bridge facility’ worth £434m has been agreed with the financial advisers for 2013, with £260m available immediately and the remainder available after agreement with major lenders.