Neil Woodford’s investment firm is leading the charge to oust the chief executive of Kier Group after a £250m rights issue left the board with egg on its face.
Sky News reported over the weekend that Woodford Investment Management, which holds a little over 14% in the construction group, has expressed a desire to see Kier’s top boss Haydn Mursell or finance director Bev Dew, or both, removed in the coming months.
Woodford’s calls for a senior management shakeup are supported by other key shareholders and are likely to intensify unless chairman Philip Cox makes a hasty move to find replacements, the news outlet said.
An embarrassing ordeal
The Woodford-led shareholder rebellion follows a tumultuous financial year for Kier in which the group saw 61% wiped off its share price, was kicked out of the FTSE 250 and was forced to launch a £250m emergency rights issue to get a handle on its growing debt problem.
The recent fundraising proved an embarrassing ordeal for Kier. Although it was able to raise the funds it needed, the five banks that underwrote the deal were forced to take on two thirds of the new shares as the group’s share price dropped below the rights issue price.
These have since been sold to institutional shareholders, providing a slight boost to Kier’s share price, which has risen from 409p to 514p since the start of the year.
The underwriters’ losses were also partly offset by £14m in fees paid by Kier.
Kier’s slump in market cap has also made the group a target for short sellers. In December 14% of the stock was out on loan to short sellers, which included Blackrock’s UK investment business and London-based hedge fund Marshall Wace.
Woodford ups his stake in Kier
Woodford has been boosting his position in the beleaguered construction group since the start of the new year, a move which is expected to lend him further credibility at the bargaining table. A regulatory filing from 7 January shows him purchasing 945,000 additional shares in the company, taking his stake from 13.58% to 14.16%.
Kier’s largest shareholder Standard Life Aberdeen has also topped up its stake in the firm 15.85% to 16.22%.
Woodford Investment Management declined to comment.
