Murray & Roberts 2 Billion-Rand Rights Offer to Reduce Debt

Murray & Roberts Holdings Ltd., South Africa’s second-biggest construction company, plans to sell 2 billion rand ($256 million) of stock to existing investors to cut debt and fund its order book and expansion. The stock fell the most in 11 months.

The rights issue will boost a recovery and growth plan aimed at restoring profit “as soon as practically possible,” Johannesburg-based Murray & Roberts said in a statement today. Lowering debt will help Murray & Roberts “withstand the impact of current uncertain global economic and financial markets.”

Shares of Murray & Roberts fell as much as 9 percent, the most on an intraday basis since Feb. 25, to 25.49 rand and was trading at 26.42 rand as of 9:12 a.m. in Johannesburg.

Murray & Roberts posted a fiscal loss of 5.05 rand a share before one-time items and resolved to not pay dividends until its liquidity improved following a slowdown in South African spending on infrastructure and unresolved claims with projects in its home market and Dubai. Murray & Roberts, which helped build the Gautrain rapid-rail network that links Johannesburg and Pretoria, has operations in the Middle East and Australia.

On Jan. 27 Citigroup Inc. named the South African construction company as one of its top stocks and said the industry may grow profit by an average of 11 percent this year, helped by a weaker rand and capital expenditure in Australia’s mining sector.

Murray & Roberts said its order book increased to 57 billion rand by the end of December, up from 55 billion rand at the end of June. The company “is experiencing improved trading conditions in all operating platforms, other than Construction Africa and Middle East,” it said.

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