LONDON (Reuters) - Shares in troubled British outsourcer Carillion slumped for a third straight day on Wednesday as fears over a possible rights issue prompted another broker downgrade.
RBC slashed its target price on Carillion to 100 pence from 230 pence, though kept its rating at “sector perform”, while Stifel also cut its estimates and moved it to “hold” from “buy”.
Currently Carillion is trading at 67.6 pence.
“The most likely course of action will be a rights issue, but we would not rule out a more dramatic restructuring (an exit from Construction?), or potentially a combination of both,” analysts at RBC Capital Markets said in a note.
Carillion’s shares tumbled more than 10 percent to the bottom of the UK mid cap index, taking this week’s losses to over 63 percent after its troubles began on Monday when it warned on profits and its CEO quit.
The firm’s convertible bond due 2019 slumped too with the yield-to-maturity on offer spiking to more than 8 percent. It was around 3.8 percent as of last Friday’s close.
Reporting by Kit Rees, Editing by Vikram Subhedar