Pilkington owner Nippon Sheet Glass to fund expansion in share issue

PILKINGTON owner Nippon Sheet Glass (NSG) plans to raise about £376m in a share issue to fund new growth and pay down debt.

The Japanese glass-maker, which bought St Helens-based Pilkington in 2006, said it is planning a public offering of up to 222m new shares, including 140.4m to be offered overseas and 81.6m in Japan.

The issue will also allow an underwriter to offer 12m existing shares borrowed from current shareholders in case of strong demand in Japan.

NSG said the offering price will be set between September 8-10.

JP Morgan Securities and Daiwa Capital Markets Europe will be the global underwriters of the offering, while Daiwa Securities Capital Markets, Nikko Cordial Securities and JPMorgan Securities Japan will underwrite the Japanese offering.

The offering is expected to expand NSG’s share base by about 30%.

Shares of Nippon Sheet, whose rivals include Japan’s Asahi Glass and France’s Saint-Gobain, dropped 0.5% after the announcement.

It said some of the proceeds of the fundraising will be used to expand production in the building products business in China, based on an agreement with Shanghai Yaohua Pilkington Glass.

The group said the global economic downturn has affected each of its businesses, but it said it plans to develop its business by expanding its presence in emerging markets with strong growth prospects, such as South America, Mexico, Eastern Europe, South East Asia and China.

Last month the group issued an upbeat trading statement which indicated it expected to return to the black this year as the global recovery continues to increases demand for its products.

NSG had predicted it would make a loss of £29m for the year to March 2011 as its key markets in construction and the automotive sector remained depressed.

But improvements in both these markets mean it is now predicting a net income for the year of £7m.

Its annual sales forecast remains constant at £4.4bn, thanks to the effects of the strong yen.

For the first half NSG is predicting a net income of £7m, up from a previous forecast of a £22m loss.

In another sign that its markets are strengthening, in June Pilkington announced it was to re-start one of its St Helens float glass lines in a move that will create up to 130 jobs.

The decision to step up production was attributed to strong demand in South America.