Struggling Carillion strengthens its reserves with £50m healthcare sale
● Construction group also confirms it is reconsidering plans to sell Canada arm
Embattled infrastructure giant Carillion agreed yesterday to sell the bulk of its UK healthcare arm to outsourcing giant Serco as it continues with a restructuring programme amid heavy losses.
Serco is to pay £50 million for the unit, and the sale is part of Carillion’s plan to sell off £300m of non-core assets by the end of 2018 as its full-year debt is forecast to come in at more than £800m. Shares in the group jumped 6.3 per cent to close at 46.5p.
But the company added that although it still intended to sell its remaining UK healthcare contracts next year it was looking again at the previously flagged proposal to sell its Canadian arm.
“While Carillion is continuing to pursue the disposal of the group’s Canadian businesses, it is also evaluating whether a better result for the group would be achieved by retaining for now certain of those businesses,” it said.
The group also revealed it has signed two credit facilities that have given it between £170m and £190m of financial flexibility as it looks to beef up its balance sheet in an attempt to stay within borrowing limits.
Keith Cochrane, interim chief executive following Richard Howson stepping down after a Carillion profit warning last July, 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.” Cochrane, a former boss of Glasgow-based engineering group Weir and finance chief at transport group Stagecoach, added: “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.”
After the July profit warning, Carillion’s shares dived 70 per cent in one week. The group issued another full-year profit warning late last month, as it announced a £1.15bn pre-tax loss for the first six months of 2017 as it was hit by several restructuring charges.
This included an £845m writedown linked to support services contracts and a goodwill impairment charge of £134m linked to construction activities in the UK and Canada.
Carillion has forecast that full-year revenue will be between £4.6bn and £4.8bn, down from an earlier range of £4.8bn to £5bn. Excluding exceptionals, interim pre-tax profit fell 40 per cent to £50m. Analysts say also weighing on the shares has been Carillion’s consideration of a rights issue.