BGN Entrepreneur

The building supplies group Wolseley braved shell-shocked equity markets by launching a £1bn cash-raising move to stengthen its balance sheet.
The debt-laden company unveiled a combination of a share placing and deeply discounted rights issue, both underwritten. Wolseley is placing 225m new shares at 120p, raising £270m, and is asking investors for a further £781m through an 11-for-five rights issue at 40p a share. The programme will raise £1bn after expenses. As part of the financial reorganisation, Wolseley has arranged a £890m loan facility, available in 2011.
The fundraising is the latest in a series of moves Wolseley has undertaken to ride out the slump that has hit construction markets in Europe and the US. Over the past 18 months the company has cut its global workforce by 17000 and closed some 700 branches. It is looking to dispose of its Stock business in the US and is reviewing its exposure to central and eastern Europe. Alongside the funding moves, the company announced a first-half trading profit of £182m, down more than 42% on the same period last year. However, after a £262m exceptional charge and an £800m amortisation and impairment cost, Wolseley was left with an operating loss of £880m.
It has slashed capital spending, boosted working capital flows and said it would not pay an interim dividend. Hornsby added the financial restructuring would substantially strengthen the balance sheet.

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