Investors in Superglass warned over fundraising

SHARES in Superglass, the Scottish insulation manufacturer which has seen its value plunge from more than £120 million to less than £6m since it floated seven years ago, fell sharply again yesterday after it said it was mulling options to address a funding shortfall.

Superglass chief executive Alex McLeod
Superglass chief executive Alex McLeod

The Stirling-based firm said it was looking at a discounted share issue. It also revealed it had received unsolicited approaches for its main trading subsidiary, but said the offers “would provide unacceptable returns for shareholders”. Shares fell almost 17 per cent, or 4p, to close at 20p.

Superglass, led by chief exe­cutive Alex McLeod, pictured, said trading conditions in the UK market continued to be difficult, blaming excess manufacturing capacity, a highly competitive environment and continued pricing pressure.

The firm warned: “Demand from government energy efficiency schemes has remained at negligible levels and no near-term pick up is anticipated.”

But the company added that demand from construction markets was showing good growth fuelled by housing and commercial construction. It said it had repositioned to focus on construction markets, with sales to the sector now accounting for 80 per cent of UK revenues against 30 per cent four years ago.

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Although sales across the business for the financial year ended 31 August were 5 per cent behind last year, revenues in the second half were

10 per cent ahead of last year.

“Overall trading for the full year was slightly behind management expectations and order patterns remain volatile with order visibility expected to continue to remain low for the foreseeable future,” it told investors.

Superglass also said it had made “significant operational progress”, driving down costs and improving manufacturing efficiencies, but that plans for further annual cost savings would require upfront investment of £1.1m in manufacturing processes. Although new banking facilities of up to £4.8m will meet trading needs, they will not be adequate to fund the additional cost-saving initiatives.

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The company said it was actively considering a proposal for a discounted equity issue of at least £5m which had the support of a number of significant shareholders.

“This proposal would enable the latest cost-saving plan to be implemented and address any foreseeable funding requirement of the group, and is therefore under active consideration,” the firm said.

• Shares in chemicals transportation specialist Interbulk fell yesterday, down 0.5p to 3.88p, after it warned annual profits will fall short of expectations because of problems in the European polymer industry.

Although the East Kilbride-based firm expects trading during the second half to have been stronger than the first six months of the year, activity at its dry bulk chemicals arm has weakened because European polymer plant closures have led to less transport activity.