Carillion agrees £50.1m healthcare sale
Crisis-torn Carillion has agreed to sell a large part of its UK healthcare facilities management business to Serco Group for £50.1 million.
The Wolverhampton-based construction and support services group has been looking to sell of some of its businesses to shore up its finances after it suffered a £1.15 billion half-year loss after revealing major problems with construction projects at home and in the Middle East.
Carillion, which announced on September 29 that a term sheet for further committed credit facilities of £140m had been agreed with five of the group’s core lenders, has announced the signing of two committed facilities, totalling £140m, which is fully available to draw down now.
The group has also agreed new committed bonding facilities, together with the deferral of certain pension contributions and the deferral of repayment of private placement notes due in November 2017 and September 2018.
Taken together, Carillion’s new facilities and agreed deferrals improve group finances through 2018 by between £170m and £190m.
The group continues to assess a broad range of options for optimising its capital structure and to this end is engaged in constructive talks with stakeholders.
The sale to Serco is subject to a limited working capital adjustment. Carillion has agreed to give Serco a period of exclusivity to provide the parties with time to finalise a business purchase agreement, which Carillion and Serco are aiming to sign in the next few weeks.
The transfers of contracts involved are each subject to receipt of third party consents, and, if required, shareholder approval. It is intended for the contract transfers to take place on a phased basis, with the aim of receiving the bulk of the proceeds during the first half of 2018.
Carillion intends to dispose of the remaining contracts in its UK healthcare facilities management portfolio during 2018.
It is also continuing to pursue the sale of the group’s Canadian businesses, but is also evaluating whether a better result for the group would be achieved by retaining for now certain of those businesses.
Non-core disposals are anticipated to raise £300m by the end of 2018.
Carillion has continued to win new work including a £200m contract to build a broadband network in Devon and Somerset for ultrafast pure fibre broadband company Gigaclear in a 60:40 joint venture with telent.
It has also won a £105m contract to deliver Creek Horizon, a collection of premium residential apartments located at the Island District in Dubai Creek Harbour and a £71m contract with the University of Manchester to design and build phase one of its Fallowfield Student Residences project.
Carillion's interim chief executive Keith Cochrane said: “Today we are announcing progress on a number of fronts and whilst our customers and creditors continue to be supportive, much remains to be done. We remain focused on executing our disposals and cost savings programmes while continuing our discussions with our lenders and other stakeholders to explore further ways of strengthening Carillion’s balance sheet.”
