Manchester-based tool and equipment rental firm HSS Hire Group plc said on Monday it proposes to raise up to £54 million by selling new shares in the firm at a 55% discount.

The shares will be placed at 10p compared to their 22.40p closing price on Friday.

HSS said it proposes to raise £54 million via a firm placing and open offer in the coming weeks and has secured commitments from three of its major shareholders to subscribe for £43.5 million of the shares.

HSS said that “given that the challenging economic environment may last for a prolonged period” it is possible that without the capital raise its debt covenants may be breached when tested at the end of 2020. 

HSS also said: “Given the current free float and size of HSS Hire, the board is exploring alternative listing venues for the company, while ensuring an active market in its ordinary shares.”

HSS chairman Alan Peterson said: “This transaction is a major vote of confidence from three shareholders representing over 75% of the company’s shares.

“It is testament to the significant strategic and operational progress HSS Hire has made since the start of 2018 as well as its resilience in challenging economic conditions.

“This capital injection will enable the group to further reduce its leverage – one of our foremost objectives – and gives us a strong platform from which to continue to implement change and drive growth. 

“I am delighted that the open offer gives all current owners of the business the opportunity to participate on the same terms, and on behalf of the board, I would like to thank all our shareholders as well as HPS and our other lenders for their continued positive support.”