Shares in structural steel company Severfield Rowen slid on Tuesday morning after the company disclosed a change to the profit and loss account of 20.1m pounds in the 12 months to December 31st.
Unveiling the details of a scheduled board review of the company's finances, Severfield Rowen said it was considering seeking equity financing worth up to £50m and had lowered its expectations for the current year and 2014.
"As a result of the review and the wider trading backdrop, the board has taken a more prudent view of the overall prospects for the group in 2013 and into 2014 and, accordingly, its expectations are now somewhat lower," a statement issued by the company said.
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John Dodds, Executive Chairman of Severfield Rowen, commented: "Despite the disappointment of the financial impact on the group from the findings of this review, I am encouraged by many of the conclusions drawn from it and by the actions we will be taking to improve our business."
"This is a good business which remains well supported by its customers. It is important to note that, following our rigorous review process, the vast majority of the group's contracts are progressing satisfactorily, with both Atlas Ward and Fisher Engineering performing particularly well."
"We believe that the group can return operating margins of betweebn 5% ad 6% over time and I am confident that the longer-term fundamentals of the group remain strong," he added.
Equity financing - update scheduled for February 28thThe company reported that it had engaged in positive discussions with a number of its major shareholders representing in aggregate 56.1% of the group's issued share capital.
As a result of the discussions, the company said that all of the shareholders had indicated that they were supportive of a potential equity fundraising by the group of up to £50m.
Discussions were also continuing with the group's lending banks who agreed to waive certain financial covenants in the existing banking facilities that were due to be tested on December 31st.
The company said that it inteneded to announce the terms of the equity fundraising and the group's amended banking facilities by February 28th.
Severfield currently has an order book worth £209m and expects to make savings of £2.0m from the reorganisation of the group's largest businesses.
The company's share price was down 7.01% to 73p at 10:00 on Tuesday.
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