Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Severfield-Rowen plans £48m rights issue after announcing losses

Severfield-Rowen will raise £48m through a rights issue after issuing downbeat financial results today.

The steel contractor reported an operating loss of £18.2m in contrast to last year’s profit of £14.2m, with revenue also down to £256.6m from £267.8m.

A major factor was the overrun on the contract to build the Leadenhall Street ‘Cheesegrater’ skyscraper in London.

The group reported that the technical challenges of working on the site were “significantly greater than originally estimated” and would require “longer timescales” and “greater resources” to complete.

Severfield-Rowen now expects to make a loss of £9.9m on the contract. Eight other contracts have also contributed to the expected losses.

Severfield-Rowen chief executive Tom Haughey departed last month as the firm reported cost overruns on the Cheesegrater project and entered talks with banks.

It announced a £20.1 million hit to its profits, including the cost overrun on the Cheesegrater due to “significantly greater” technical challenges than originally estimated earlier this month.

The fully underwritten rights issue will raise £45m after expenses and will see existing shareholders’ stake diluted by 70 per cent.

Executive chairman John Dodds said: “Today’s rights issue puts Severfield-Rowen on to a sound financial footing. The events that led to the rights issue related to an unacceptable level of performance on a small number of contracts. Positive action is in hand to address these issues and improve performance.”

He added: “With the balance sheet strengthened, we are confident that the group will move forward positively from here to achieve its long-term growth objectives, both in the UK and India.”

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.