JSE-listed construction company Basil Read's shares on Monday rose 4.17%, after reporting that its rights offer, aimed at raising R300-million, received full support.
The company issued 1.36-billion shares at 22c apiece - a discount to the 65c apiece closing share price on January 26.
The proceeds would be used to recapitalise Basil Read's balance sheet to position it for the current environment, following a sustained downturn in the construction sector, which was further affected by cash drains on its balance sheet, cost overruns, bad debts and penalties.
A few legacy cash-depleting projects over the past years have further negatively impacted on the cash reserves of the company, resulting in cash flow being constrained and Basil Read being unable to meet future cash requirements without recapitalisation.
The first phase of the recapitalisation involved seeking a bridge facility from the Industrial Development Corporation of R150-million. The first tranche of R61-million of the R150-million bridge funding was approved in August last year and drawn down in September.
The second tranche of R89-million was approved in October and the remaining R43-million was drawn down in December to meet existing commitments.