Greencore faces equity placement

CONVENIENCE food group Greencore suffered a sharp hit to its share price in early trading yesterday as it emerged that 29.5% of the group’s equity is about to be placed with new investors.

In a statement, Greencore confirmed Ulster Bank, which had acquired 29.1% of developer Liam Carroll’s stake in the group “no longer has a holding in the company”.

Shares in Greencore suffered their worst fall since July when news of the placing emerged. In early trading the stock was down 7.7%

ABN Amro Holding is placing 59.9 million shares, representing 29.5% of the company’s market value, via an accelerated bookbuild, according to the terms.

It is understood the Dutch bank is close to completing the placement.

Bloxham analyst Joe Gill said at the publication of the group’s results last month it was critical to the group’s interests that all of the shares were off-loaded without delay.

Following the statement from the group, the shares recovered some of the lost ground and were trading at €1.40, a fall of 6 cents or 3.93%. The shares closed down 2.68%.

Due to the overhang of the stock, markets were unsure about how the group would evolve if the stock was sold by Liam Carroll, who gave no reason for his purchase from financier Dermot Desmond, though the group’s substantial development land bank was thought to be his target.

Meetings that followed Greencore’s results last month should have ensured enough investors had been lined up to ensure a smooth transition of the shares to third parties, Bloxham said yesterday.

“Any fractured placing will frustrate investors and managers alike”, it said, echoing the comments made last month by Mr Gill.

After the results, the broker expressed satisfaction with emerging trends in the main food business.

It noted the growth in margins achieved in the core food division and the positive indicators that its fledgling US business, acquired in 2008, was building up strong sales suggesting an annual turnover of $150m (€107.7m).

The group has ambitions to grow that business to between $750m (€508m) and $1bn (€680m) in five years, to equal its European sales, derived mainly from its major British base.

It has also emerged that the group is close to selling its extensive malting business to Soufflet Group of France, a decision that could be announced shortly.