Collapsed Shares Add to Woes of Woodford Fund that Just Froze Withdrawals.
UK construction and services giant Kier Group, with 20,000 employees, is on the ropes after issuing a profit warning, amid worries about its debt, that sent its shares spiraling down 40% on Monday and a further 2% on Tuesday, and another 4% so far today to 154 pence. The stock is down 56% over the past month and 85% over the past year and is now worth less than the price it opened at on its first day of trading back in December 1996.
Kier is one of the UK government’s top external suppliers of public services. It builds and maintains highways, railway tunnels and houses, among many other things. It even fixes domestic plumbing for local authorities, housing associations and private landlords.
But it has been struggling for years as profits shrink on the back of falling revenues from its key highway construction, home maintenance and construction businesses. At the tail end of last year, the firm announced it was planning a rights offering at 409 pence a share, in a desperate bid to raise new funds. But when push came to shove, investors — mindful that Kier just had had to revise up its levels of debt by £50 million due to an “accounting error” — purchased a meager 37.6% of the shares offered, leaving the firm with just £265 million of new funds.
That, apparently, wasn’t enough. On Monday, Kier warned of higher than expected costs and lower than expected revenues and earnings, and that it would probably report a net debt position as of June 30, just months after having forecast it would be in the black…