LONDON (ShareCast) - (Sharecast News) - Forterra said on Thursday that it has raised around £55m in a placing to bolster its balance sheet.
The producer of manufactured masonry products placed just over 28.2m new ordinary shares at 195p, which is a 14% discount to the share price before the placing.

It said the proceeds will enable it to maintain a strong balance sheet that can support its continued investment programme, including the completion of a new brick manufacturing facility at Desford in Leicestershire, which is expected to generate "attractive" returns over the medium term.

They will also allow Forterra to benefit from an accelerated recovery in the housing market and withstand a range of downside scenarios as a consequence of the Covid-19 outbreak

Broker Peel Hunt said the placing is "eminently sensible".

"The expansion at Desford is a key pillar of the group's medium-term strategy and investment proposition, and pausing its completion (an outcome that appears inevitable without raising equity) makes little commercial sense on a medium term view," it said.

"The completion of the new brick plant will add 16% to the group's capacity and incremental EBITDA of £17m, potentially rising to £20m by 2025, with an internal rate of return of 15%."

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