Grafton cancels bond issue
CONSTRUCTION firm Grafton group has been forced to pull a bond it planned to issue after it couldn't attract enough investors without shelling out a higher interest rate than planned.
In a stock exchange filing, the firm said a "proposed issue of Sterling Retail Bonds by its wholly owned subsidiary Grafton Group Finance plc published on June 24 has been withdrawn.
"Interest rate volatility and market uncertainty during the offer period influenced investor sentiment and demand.
"The group has therefore decided not to proceed with the issue at this time," Grafton added.
While the company has substantial cash reserves, with free cash flow of more than €200m and a €100m untapped loan facility, Grafton apparently was still casting around for alternative forms of finance.
Given the low interest rates available on the markets, Grafton apparently began exploring the possibility of running a bond last month before finally issuing notice of the bond to the markets on June 24.
While having to pull the bond is a setback to Grafton, it is also a blow to Investec, which was the book runner on the deal.