It emerged last night that Neil Woodford is still buying shares in Kier Group (KIE) like they are going out of fashion. Mind you, with the stock again plumbing the depths, I guess they are – and Neil Woodford appears to be the only buyer in town
Andrew Davies narrowly missed out on what surely would have been the corporate hospital pass of the decade – last year he was announced as the new CEO of Carillion, but it went bust before he got his feet under the desk. Now he comes in as the new CEO of Kier (KIE) and despite the rights offer of last December, his first move is a strategic review.
Neil Woodford is nothing if not brave – but I suppose given his crashing equity income fund, bravery is about the last option open. This morning it was announced that he has again been topping up his holding in Kier Group (KIE). Meanwhile the shares have now fallen below the low-water mark out in during the rights issue fiasco. So is it brave, or is it a Hail Mary shot?
Last week fully-listed Keir Group (KIE) followed its disastrous rights issue of December and its awful trading update of earlier this month with pretty awful results – and a 79% cut in the dividend. The shares collapsed (again) and the short sellers piled in. But there was one lone voice buying – yes, you guessed it: Neil Woodford.
Neil Woodford has had another rotten week. Netscientific, which it seems he’s not going to fund any further, saw its holding in PDS listed on Nasdaq via a merger at $10 a share and the shares promptly headed south to close last night at just $7.65 – a drop of 23.5% which won’t help Netscientific keep the lights on much.
Oh dear, oh dear, oh dear. Just when Neil Woodford might have thought it couldn’t get any worse (at least for a day or two), up pops fully-listed Kier Group (KIE) – whose rights issue refinancing saw the humiliation of being bailed out by the underwriters last December - which seems to have found an extra £50 million of debt since its trading statement of just seven weeks ago……and capped that with the announcement of a £25 million provision with regard to a redevelopment project at Broadmoor Hospital. As I write, the shares are at session lows of 412p a drop of 85p, or 17%. Neil sure can pick’em.
A spot of maths and it seems that we were all wrong! In the prospectus for the rights issue by Kier Group (KIE) we were told that Neil Woodford was sitting on 13,797,000 shares, or 14.13%. We were also told that if he took up his rights in full he would hold 22,903,020 shares, or 14.13%. We know that Woodford piled in for more shares after the rights offer was announced. So what did he end up with?
Its bailout rights issue closed for acceptances yesterday, Kier Group (KIE) has announced “valid acceptances in respect of 24,276,286 new shares, representing approximately 37.66 per cent. of the total number of new shares to be issued pursuant to the fully underwritten rights issue”. Oh dear! And it gets worse…
Well the next disaster set to strike Neil Woodford looks to be Kier Group (KIE) again, for he appears to be caught between a rock and a hard place. We know that the rights issue was announced on 30 November and that Neil was on the hook for around £37 million from that. Yet as the shares crashed on the news, Woody was buying yet more, increasing his stake from 14.12% to 15.4% (15 million shares) by 4 December. But the shares now trade below the rights offer price. Uh-oh!
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