SIG raises £150m as Clayton, Dubilier takes 25% stake

Sheffield-based European building materials supplier SIG plc announced on Friday a proposed £150 million equity raise with US buyout firm Clayton, Dubilier & Rice as it unveiled disappointing annual results.

SIG, which scrapped its dividend and said it expects revenues for 2020 to be £500 million lower than 2019, said the share sale is expected to result in a 25% shareholding by Clayton, Dubilier & Rice.

SIG said funds managed by Clayton, Dubilier & Rice LLC will invest up to £85 million in the company as part of the equity raise.

“CD&R has agreed to invest up to £85m, with a guaranteed minimum of £72.5m, conditional on c.£150m of equity being raised and satisfactory amendments to the group’s financing facilities being agreed,” said SIG.

The company reported a statutory loss before tax from continuing operations of £112.7 million versus a profit of £10.3 million a year earlier.

SIG chairman Andrew Allner said: “The 2019 results, albeit in line with January guidance, are disappointing.

“However, the board has taken decisive action to address this performance.

“A new CEO has been appointed and, this morning, we announced the appointment of a new CFO.

“In addition, we have new managing directors of the UK and German businesses.

“Furthermore, under the leadership of Steve Francis, we have developed a new strategy which has been well received by customers, suppliers and colleagues.

“We recognise the need to raise new equity, of approximately £150m, to provide a solid capital structure for the future and we are pleased to announce that CD&R has conditionally agreed to invest up to £85m in the company and take two board seats.

“We welcome CD&R as a long-term, supportive shareholder and believe they will bring considerable value to SIG through their contribution on strategy, operational performance, culture and value creation, which will benefit all stakeholders.

“We are pleased to note the backing of IKO, our largest shareholder.

“We remain in constructive discussions with our lenders and we are confident that we will get to a satisfactory financing position. 

“I am determined to restore value to shareholders and am confident that we now have the right management team and strategy to achieve this.”