Jan. 31 (Bloomberg) -- Murray & Roberts Holdings Ltd., South Africa’s second-biggest construction company, fell the most in a month after saying it plans to sell 2 billion rand ($256 million) of stock to cut debt and fund expansion.
Murray declined 4.3 percent, the most since Dec. 14, to 26.80 rand at the close in Johannesburg.
“Many expected a turnaround in the South African construction sector, but this shows that things are still not rosy,” Hugan Chetty, an analyst with Johannesburg-based Afrifocus Securities said by phone today. “There may be a 5 percent to 10 percent drop in share prices in this sector before a turnaround.” Chetty, who has a “hold” recommendation on the stock, will be revising his recommendation, he said.
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.
Murray & Roberts posted a fiscal loss of 5.05 rand a share in the year through June before one-time items and resolved not to 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.
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