The company behind Gloucester's new bus station and the county council's building works has dropped out of the FTSE 250.

Debt-laden Kier has seen shares tumble following the announcement of plans to raise £264m to pay off debts by selling discounted shares , known as a rights issue, as reported by Construction Enquirer.

The contractor's shares have plummeted nearly 65 per cent from the 52-week high of 1,167p to just 408p at the close of trading yesterday.

Kier reported June year-end net debt at £186m, which it described as being at a controllable level. Since then, the financial position has deteriorated, with debt at the end of October hitting £624m.

The rights issue is expected to go through on 20th December, raising £250m after costs, which will be channelled into reducing debt and speeding up payments to subcontractors.

Yesterday's trading saw shares dip below the rights issue price of 409p. At the time of the announcement of the rights issue less than a week ago, this had represented a 34 per cent discount on the share value.

While the rights issue has been underwritten by banks HSBC, Santander, Peel Hunt and Citigroup, it looks like the so-called discounted shares could now sell above the market price.