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Carillion inks definitive sale agreement for disposal of bulk of its UK healthcare facilities business

The firm said an agreed proportion of the total consideration of approximately £47.7mln will be payable in instalments on the transfer of each facilities management arrangement
Carillion staff
Carillion issued its third profit warning in five months in November and said it was heading towards a breach of debt covenants

Carillion PLC (LON:CLLN) has now entered into a definitive sale agreement with Serco PLC (LON:SRP) for the disposal of a large part of its UK healthcare facilities management business.

Further to its announcement on October 24, the struggling construction contractor said today that a portfolio of UK healthcare facilities management contracts and associated ancillary contracts and assets which relate to fifteen sites will be transferred to Serco on a phased basis.

READ: Carillion shares up as stock overhang cleared after biggest shareholder, Kiltearn halves stake

The firm said an agreed proportion of the total consideration of approximately £47.7mln will be payable in instalments on the transfer of each facilities management arrangement to Serco, with the aim of receiving the bulk of the proceeds in the second and third quarters of 2018

After taking account of fees, costs and taxes, it added, the net disposal proceeds are expected to be £41.4mln which will used to reduce the firm’s debt.

Keith Cochrane, Carillion's Interim chief executive, said: “I am pleased we have been able to successfully conclude this transaction which will contribute to our efforts to reduce net debt."

Carillion issued its third profit warning in five months in November and said it was heading towards a breach of debt covenants and would need fresh capital.

READ: Carillion fighting for survival after third profit warning

The group's shares have slumped by over 90% since it first issued a profit warning and its CEO quit in July but have been rallying this week helped by the clearance of a stock overhang after Scottish investment firm Kiltearn Partners, the firm’s largest shareholder was revealed to have halved its stake in the company.

Kiltearn cut its stake in Carillion to 4.94% on December 7, down from 9.85% previously, a notification of major holdings statement revealed.

In late morning trading, Carillion shares held steady at 17.5p.

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