Shares are being offered at a 68.7% discount to yesterday’s closing price, and will see existing shareholders’ stakes diluted by 70%.
The troubled steelmaker also reported a operating loss of £18m on revenues down at £257m for the year.
Earlier this month Severfield said losses on the Cheesegrater tower is London had hit £10m. Eight other problem contracts make up the balance of anticipated losses.
John Dodds, executive chairman, said: “Today’s rights issue puts Severfield-Rowen on to a sound financial footing.
“The events that led to the rights issue related to an unacceptable level of performance on a small number of contracts.
“Positive action is in hand to address these issues and improve performance.”
Dodds added: “It is extremely encouraging that our shareholders, our lenders and our clients have shown strong support for the business, endorsing the group’s market leadership, longevity and underlying potential.
“With the balance sheet strengthened, we are confident that the group will move forward from here to achieve its long term growth objectives, both in the UK and India.”