SUPERGLASS Holdings, the insulation maker that employs 150 people in Stirling, has announced plans for an emergency fund-raising under which Swedish investor Peter Gyllenhammar will take a 38.9 per cent stake in the firm.
The company has lined up £6.25m funding through a share placing with Mr Gyllenhammar's Bronsstädet AB due to provide around £3m.
The Aim-listed firm is also switching its bank from Clydesdale to Close Brothers.
Directors of Superglass said the discounted share issue was necessary to bolster the firm's finances amid tough trading conditions. Sales under key government programmes that were expected to boost demand for insulation, such as Green Deal, remain negligible.
Superglass told investors: "The Board has concluded that the method of issue and Placing Price is appropriate to secure the investment necessary in the Company, having regard to its financial and trading position, with current cash balances eroded to the point where the Company may struggle to absorb any further material trading losses in the near term, and the importance therefore of further strengthening the Company's balance sheet without delay in the face of continuing volatility in trading conditions."
The company stressed the importance of shareholders voting to approve the placing at a general meeting on October 30. It added: "The Board has already explored alternative options to the Placing including a sale of the principal operating subsidiary and, as a result, the Board's judgment is that none of these options is likely to deliver any meaningful value to Shareholders."
Superglass is seeking approval for a resolution under which Mr Gyllenhammar will be given a dispensation from the City Code requirement to make a full bid for the company. The Swede will be able to appoint a non-executive director. However, Superglass said Bronsstädet AB has confirmed if the placing is approved it has no intention to make changes in respect of " the continued employment of employees and management" of the company, its strategic plans or place of business.
The company's Aim listing will be retained, but the placing would result in the significant dilution of the holdings of any investors that did not participate.
Superglass' chairman John Colley said the placing will provide the company with a considerably strengthened and sustainable capital structure. He added: "The Company continues to be well placed to benefit from any resurgence in market volumes and the efficiencies from its on going capital investment programme."
However, Superglass expects over-supply in the market to persist for some time. The company said: "The Board has identified potential incremental annual cost savings of approximately £1.9 million, which would ... include a significant reduction in manufacturing capacity."
Chief executive Alex McLeod said he had had extensive dialogue with Mr Gyllenhammar. He added: "Mr Gyllenhammar is a seasoned investor in the industrial manufacturing space and I see real value in having him on our share register as a deep pocketed strategic investor."
Superglass said it has placed 125m shares with "institutional and sophisticated private investors" subject to shareholder approval. The placing price of 5p compares with a closing price of 9.75p on Monday.
The company has also secured bank facilities of up to £4.8 million with Close Brothers. Clydesdale Bank will be repaid at a discount of 15 per cent, or £375,000, to the £2.5m outstanding. It will get shares in Superglass representing 1.8 per cent of the enlarged total.
Mr Gyllenhammar had a 14.7 per cent stake in Superglass early last year but sold the bulk of his shares off in January 2013. He has invested in several Scottish firms and had a big stake in Dawson International when the textile firm went into administration in 2012.
Under the City Code investors that acquire more than 30 per cent of a company's shares have to make an offer for all of them.
Shares in Superglass Holdings closed down 4p, 41 per cent, at 5.75p.
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