Carillion PLC (LON:CLLN) shares jumped higher today as the troubled construction and services group revealed it has agreed new credit facilities and deferrals on some debt repayments, offering a life-line to the firm that has issued two profit warnings this year, and that it is moving ahead with disposal pl
In afternoon trading, Carillion shares were 8%, or 3.5p higher at 47.25p.
The small cap group said it had agreed to two facilities totalling £140mln and deferrals on certain pension contributions, and on the repayment of private placement notes due in November and September 2018.
READ: Carillion warns on full-year results, as it posts massive first-half loss
It added that together these would improve its "headroom" in 2018 by between £170mln and £190mln.
The group said it continues “to assess a broad range of options for optimising its capital structure and to this end, is fully engaged in constructive dialogue with stakeholders.”
Carillion also revealed that it had signed a head-of-terms agreement to sell a large part of its UK healthcare business to outsourcing company Serco Group PLC (LON:SRP) for £50.1mln.
The firm – which announced plans to exit its UK Healthcare business in September - said it intends to dispose of the remaining contracts in its UK healthcare facilities management portfolio during 2018.
Carillion added that, while it 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.
READ: Carillion shares jump as it confirms proposals to buy UK healthcare business
The group said in a statement on Tuesday that it continues to target non-core disposals with aggregate consideration anticipated of over £300mln by the end of 2018 and further announcements will be made in due course.
It also highlighted recent contract wins including a £105mln Dubai Harbour contract and a £200mln deal with Gigaclear, the pure fibre broadband company and said there is no change to the 2017 guidance as set out in its interim results announcement on 29 September.
Keith Cochrane, Carillion’s interim chief executive, 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."
In a note to clients on Carillion, analysts at Liberum Capital said: “We derive an EV (enterprise value) of £1.1bn on an EV/EBIT of 8x and expect debt-like things could be £1.5bn.”
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