Superglass shareholders back £12.9m survival plan

Superglass, the Stirling-based insulation materials company, today won shareholder backing for a survival plan which will see it raise £12.9 million and significantly reduce its debts.

Superglass: Survival plan has shareholder backing. Picture: Contributed

The Stirling-based firm had warned earlier this month that it would go into administration if it could not complete the share issue and conversion of about half of its debt into equity.

Under the agreement, Clydesdale Bank will convert £5.7m of debt into shares, while £3m will be paid off, leaving the group in a cash-positive position.

The company, which employs about 170 people, 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.

Measures approved by shareholders at the general meeting also included a capital reorganisation and a share consolidation.

The company said completion of the refinancing will provide it with a “considerably strengthened, long-term capital structure as a platform upon which to build a sustainable, strong and resilient business that is better positioned to compete more effectively in challenging markets”.

Earlier this month the company said that proceeds from the placing “would comfortably exceed the minimum required for the restructuring”.

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.

The debt conversion and the early repayment of debt will together result in a reduction of £8.73m in Superglass’ core debt to £2.5m. The company will also move from the main market to the junior Aim on 4 June and cash balances on admission are expected to be at least £8.4m.

The company had raised £9.5m from shareholders in November 2011 but in March this year warned it was again considering looking to the market for funding.

At the time it said that scheduled debt repayments of £8.2m over the next three and a half years were “unsustainable” given current market conditions.

The firm has suffered from the dramatic slowdown in housebuilding following the financial crisis while a government scheme encouraging people to insulate their homes failed to provide an expected sales boost. Superglass has seen its value plunge dramatically in the past six years.

At the time of its debut on the main market in 2007, the firm was valued at £121.6m, compared to yesterday’s valuation of less than a £1m.

The company’s biggest shareholder is Belfast-based family firm W&R Barnett, which owns over 22 per cent of the shares.

Irish building industry veteran Michael Chadwick, chairman of Grafton Group, also owns more than 11 per cent.

Shares in Superglass closed unchanged at 1.88p.