Investors are warming to micro cap Styles & Wood (STW:AIM) this morning on news of a tremendous second half trading performance and the refinancing of an onerous debt load.
Shares in the property services business - which refurbishes and refits anything from bank branches to schools - are surging 46% in early trade and have now hit 87p.
Around £5.1 million of new equity has been injected into the business in a complex deal which house broker Shore Capital is describing as ‘transformational’.
Ongoing annualised interest costs are expected to more than halve from a current run-rate of £700,000 to about £320,000 in the 2016 calendar year, according to Shore Capital analyst Robin Speakman.
Shareholder equity is still negative after the deal, though the deficit narrows from £6.6 million to around £1.5 million immediately after completion.
Styles & Wood should now have the flexibility to invest and grow its business, Speakman adds.
Fully diluted shares outstanding, including convertible debt, warrants issued as part of the deal and employee options will increase from 7.06 million to 8.82 million.
Profit-before-tax for the 2014 calendar year turned around from a £1.2 million loss at the half-year stage to a full year profit of £579,000.
Underlying profit-before-tax increased 200% year-on-year to £2.1 million.
Cash flow strains in the commercial office fit-out market hit sector peer ISG (ISG:AIM) earlier this year. It launched a surprise £16 million equity raise in March because of losses on contracts in its construction division.