February 28, 2013 / 8:45 AM / in 5 years

Severfield plans rights issue after loss, shares drop

Feb 28 (Reuters) - Structural steelwork maker Severfield-Rowen Plc said it planned a rights issue priced at a 67.8 percent discount to the company’s closing stock price on Wednesday, sending its shares down as much as 15 percent in early trading.

The company, which also reported an underlying pretax loss of 19.6 million pounds ($29.7 million) for 2012, said it planned to raise a net 44.8 million pounds through the 7-for-3 issue.

The issue of up to 208.25 million shares would be priced at 23 pence each, the company said. The shares closed at 71.5 pence on the London Stock Exchange on Wednesday.

Severfield-Rowen said it would use the proceeds from the issue to strengthen its balance sheet. The company had net debt of 29.7 million pounds at Dec. 31.

Executive Chairman John Dodds said the loss for the year was primarily the result of “an unacceptable level of performance on a small number of contracts.”

The company, which recorded a pretax profit of 10.1 million pounds in 2011, said in January that Chief Executive Tom Haughey would step down after cost overruns at one of its projects in London.

Severfield-Rowen said last week that its expectations for 2013 and 2014 were now lower.

The company’s shares were down 6.3 percent at 67 pence at 0843 GMT on the London Stock Exchange. ($1 = 0.66 British pounds) (Reporting by Brenton Cordeiro in Bangalore)

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