Fresh debt crisis at Superglass spooks the City

Shares in Stirling-based insulation maker Superglass crumbled yesterday as it considered going cap in hand to the market for the second time in little more than a year to help pay its debts.

The company, led by chief executive Alex McLeod, said that scheduled repayments of £8.2 million over the next three and a half years were “unsustainable” given current market conditions.

That is despite good progress on its cost-saving plans, which include investment in its factory, paid for from £9.5m raised from investors in November 2011.

At the same time, the group was given a £2m grant from the Scottish Government and its lender Clydesdale Bank agreed to convert £12.15m of debt into convertible shares.

The move was supposed to draw a line under difficulties which had reduced Superglass’s market value from more than £120m at flotation in 2007 to less than £2m as the firm suffered from the dramatic slowdown in housebuilding following the financial crisis and a government scheme encouraging people to insulate their homes failed to provide an expected sales boost.

The group warned yesterday that trading conditions remained “extremely challenging”.

Superglass will start making annual savings of £5m once its factory upgrades are completed in April and said it should be “strongly cash generative” at the operating level even at current depressed market volumes and prices.

However, the board does not think it can meet its debt service obligations and said it was considering all options to strengthen the company’s balance sheet, including the potential for a further equity issue.

It warned that any refinancing measure would result in significant dilution to existing shareholders’ equity.

The company, whose shares slid 4 per cent to 6.38p, said its bankers continue to be supportive, having provided extra “headroom” on the repayment schedule just four months ago.