Laird to raise £185 million, stop dividend payments
Through the rights issue, the company will offer shares to existing shareholders in proportion to their existing holdings in the first quarter of 2017.
Laird said the placing would enable it to deliver its operational improvement programme next year and in 2018, invest in the opportunities for growth, particularly in the connected vehicle solutions business, and to maximise shareholder value.
Laird is targeting a capital structure between one and two times net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) in the medium term.
Laird is also to scrap its final dividend this year and resume dividends in 2017 based on a dividend that is covered three times by underlying earnings per share with the interim dividend at about a third of the full year one.
Laird expects an improvement in earnings and cash generation in 2018, and subject to market conditions, it will reduce the dividend by two times over the medium term.
Laird also said it was trading is in line with expectations, with full year underlying pre-tax profit expected to be around £50m and net debt to EBITDA to be within the its covenant of just over three times it.
While the operational improvement programme is on track to deliver yearly savings of at least $20m from 2018, with $15m expected in 2017.
The total profit and loss cash cost of the project is at about $60m, which mainly provided for in 2015, with about $30m paid by the end of this year.
The balance of about $30m will be spent in 2017. ■