Revamp and rights for Ferrum
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FERRUM, the loss-making steel supplier and engineer, yesterday announced a capital reconstruction, rights issue and acquisition in moves to reduce dependence on the depressed North Sea oil and Dutch construction markets, writes Tom Stevenson.
Losses in the year to December were cut from pounds 3.63m to pounds 2.81m but the company said that trading remained mixed across all divisions. The dividend was passed.
Following the restructuring, Simon Miller, chairman, will become a non-executive while Garry Frier, the former merchant banker with whom he has run the company since 1989, will leave the board.
Mr Miller said: 'In the light of the results and the board's expectations for the current year, it is imperative to make a substantial acquisition and raise new equity.'
The acquisition of Chalcon, a Midlands engineering group, is expected to produce more high-volume, low-unit-value business and reduce Ferrum's exposure to large, unpredictable contracts.
Ferrum also plans to raise pounds 5m from a 16-for-nine rights issue to reduce borrowings and provide working capital for the enlarged group.
The cash call at 45p will follow a five-for-one consolidation of the shares, which moved 0.5p lower yesterday to 9p to match the proposed rights issue price.
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