Shares in outsourcing group Kier fell by almost 15 per cent as markets opened this morning, after the firm revealed that investors only bought 38 per cent of the new shares it had issued as part of a fundraising effort.
Kier announced last month that it would turn to the market in a heavily-discounted share sale for £264m, after it failed to secure sufficient lending from the banks.
A syndicate of four lenders, out of a group of five which included Citi, HSBC and Santander, will likely be forced to stump up 22.5 per cent of the remaining rights issue each, with the fifth holding 10 per cent, according to Sky News.
Smaller brokers Peel Hunt and Numis Securities, who also agreed to jointly underwrite the fundraising, would then reportedly face paying around £17m for their share in Kier's equity.
Lenders and investors alike have likely avoided the construction sector throughout this year, shaken by the collapse of outsourcing builder Carillion.
Chief executive Haydn Mursell told investors in a statement this morning: "Kier enters 2019 with a strong balance sheet which puts us in an excellent competitive position."
"The fact Kier has only secured 37.6 per cent of support for its £264m rights shows how little faith shareholders have in the business," said AJ Bell investment director Russ Mould.
"This low level of acceptance is a huge embarrassment for the management who probably thought they were being proactive with raising money before more serious questions were asked about the strength of its balance sheet.
"While Kier still gets the full amount of money because the rights issue was fully underwritten by five banks and brokers, its credibility will remain in tatters because of the poor take-up by shareholders. If your investors can't back you in times of need, when can you count on them?"