Superglass ‘comfortably’ complete share placing

Superglass workers at their factory in Stirling. Picture: Contributed
Superglass workers at their factory in Stirling. Picture: Contributed
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INSULATION maker Superglass “comfortably” completed its planned share placing yesterday, raising more than the £12.2 million it needed to stay afloat.

The Stirling-based firm, which earlier this week warned that it would go into administration if it could not complete its second re-financing in as many years, said it was issuing £12.9m of new shares in a move that also allows it to convert about half of its debt into equity.

New investors are buying in at a price equivalent to 2p a share, although a consolidation means they will now trade at a new price of 50p.

Chairman John Colley said: “We are delighted with the support from investors, with the placing proceeds comfortably exceeding the minimum required for the restructuring, which will provide Superglass with a considerably strengthened and sustainable long-term capital structure.”

As part of the plan to slash its debt and reduce overheads, the company will now change its listing from the main market to the junior Aim.

All the measures are subject to shareholder approval at a meeting on 20 May. The firm said that, if its proposals are not accepted, it will be in breach of its banking term with Clydesdale Bank and the group “would enter into some form of formal insolvency proceedings as soon as practicable following the meeting”, with the existing shares consequently having no value.

The company, which employs about 170 at its factory in the city, reported a pre-tax loss of £2.9m in the six months to the end of February, as sales shrank by a fifth in the face of the on-going construction slump.

It said trading conditions are “extremely challenging”, as a recent transition from one government scheme to another has caused a major gap in activity for fitting loft and cavity insulation, while housebuilding activity remains “abnormally low”. The company, floated with a market value of £120m in 2007, has already had to re-rate its shares once after its value dropped to less than £2m in 2011.

In November of that year, Superglass raised £9.5m from the market in a refinancing that also included a £2m grant from the Scottish Government and the conversion of £12.15m of debt into shares. The move had been intended to draw a line under the firm’s difficulties.

It has since invested in upgrading its factory and says it is in line to make £5m of annual savings, but was still struggling to keep up its scheduled repayments of the remaining debt.

The latest deal will see Clydesdale convert £5.7m of debt into shares, while £3m will be paid off, leaving the group in a cash positive position.

Colley said: “The company will be well placed to benefit from any resurgence in market volumes and the efficiencies from its recent capital investment programme.”