Tool rental group HSS Hire has approached investors for £13m to fund its transformation programme as the company struggles to bring its costs under control.
The company has conditionally placed just over 15.4 million shares at 83.875p, the proceeds of which will fund its ongoing restructuring.
Reshaping the business has already resulted in a £12.5m cost this year, the company said, adding that this equity injection would strengthen the balance sheet and allow it to invest in its fleet next year.
“Having assessed various equity funding options, the board concluded that the placing would be the most efficient method in terms of cost, time and management resource,” it said on Thursday.
HSS has struggled to pique investors’ interest since it floated on the stock exchange in January 2015, while weak market conditions have compounded its problems.
In September 2015, chief executive Chris Davies left the group after it issued two profit warnings in quick succession. The business blamed erratic activity in the home improvement and housing markets for a downgrade to sales and earnings forecasts in the months immediately after the float.
HSS Hire’s current chief executive John Gill has implemented a programme to reduce costs and build flexibility into the firm’s operating model to allow it to weather more volatile trading.
The company said in November that the time period for transforming the business would be extended into next year, which is likely to hit revenue from its core rental business.
Trading in the last quarter of 2016 will be at the lower end of expectations, the company said last month. In October it closed 18 underperforming branches and four distribution centres.
Shares in the company opened at 86p in this morning’s trading. It floated at 210p.