Construction and infrastructure play Kier (KIE) had several key reasons for launching its heavily discounted £264m rights issue on
30 November.

Chief executive Haydn Mursell tells Shares the company acted in the face of discussions with lenders, which have become increasingly wary of the construction and contracting sectors following the collapse of Carillion, as well as pressure to pay suppliers faster.

‘The rights issue structure was the right one for us as it enables us to have funds at the end of December with customers’ pre-qualification metrics becoming more stringent and based around a year-end cash balance,’ he adds.

Shareholders have up until 19 December to take up their rights on the fully underwritten issue. Mursell reassures on trading despite Brexit-related uncertainty, noting a focus on smaller contracts of around £70m to £80m in the health and education sectors where he says money has to be spent to meet needs created by demographic trends.

Mursell defends the use of supply chain finance. He says it was ‘abused by Carillion’ but is seen as ‘useful’ by suppliers and the Government. These arrangements see the company provide facilities which effectively enable suppliers to be paid immediately by a third-party bank at a discounted rate.

The CEO says that, as this an uncommitted facility and could be withdrawn by the banks, it is kept under close control. 

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