Under-pressure electronics and technology Laird PLC (LON:LRD) has confirmed plans to raise around £185mln through a fully-underwritten rights issue to address its debt issues as it reported a drop in 2016 profits.
The firm, which saw its shares plunge at the start of December when it unveiled plans for the cash calls plans and a scrapping of its final dividend, is offering 217 mln new shares on a 4-for-5 basis under the rights issue at 85p per share, a 37% discount to last night’s closing share price.
Laird said the net proceeds of approximately £175mln “will be used to reduce borrowings under the revolving credit facilities and will strengthen the Group's financial position, enabling it to continue to invest in its previously announced operational improvement programme and in opportunities for future growth.”
Tony Quinlan, Laird’s chief executive officer, said: ”This strengthened balance sheet position will provide us with the foundations necessary to be able to return the Company to growth, enabling us to continue to invest in our ongoing operational improvement initiatives whilst also leaving Laird well placed to invest in future growth opportunities and take advantage of the strong underlying trends we see in many of our key end markets."
In its statement the company - which makes components to protect electronic devices from electromagnetic interference and heat - said: “Despite the challenging conditions leading to a disappointing performance in 2016, there are a number of factors that leave Laird well placed in 2017.”
For 2016, Laird reported a 30% drop in underlying pretax profits to £51.1mln, down from £73.1mln in 2015, but marginally better than its previous guidance.
Headlines 2016 revenues rose by 27% to £801.6mln, but on an organic constant currency basis were down -0.4% year-on-year.
The group confirmed that it will not pay a final dividend, making the total payout for 2016 just 4.53p, down from 13.0p in 2015.
In a note to clients, Laird’s joint ‘house’ broker, Numis Securities, pointed out that: “As expected, a significant fall in profitability was caused by sales and margin pressures in Precision Metals (which supplies the smartphone market), challenging end markets in WACS and losses in the Novero acquisition.
‘Despite the disappointing performance, Laird states it is "well placed" for 2017, with expected savings from the operational improvement program, Novero expected to swing to modest profitability and the benefit of actions to improve operational efficiency and profitability in Precision Metals.
Laird shares were down 3%, or 5.25p to 169.5p in early morning trading reflecting the deeply discounted rights issue.
-- Adds broker comment, share price --