Troubled construction and support services group Carillion PLC (LON:CLLN) saw its shares rise today as it unveiled more disposals as it continues to reorganise and restructure its business in the wake of a profits warning earlier this year which led to its chief executive quitting.
In early morning trading, Carillion shares were 3.8%, or 1.75p higher at 47.75p.
READ: Carillion names Andrew Davies, boss of privately-owned construction firm Wates, as its new CEO
The small-cap firm announced the sale of its 66.67% shareholding in Ask Real Estate Limited (AREL) – plus a shareholder loan made by Carillion Construction Limited to AREL's subsidiary, Ask Central Limited – as well as its 50% interest in Ask Carillion Developments LLP (ACD) to one or more wholly owned subsidiaries of Dukehill Limited.
It said of the aggregate cash consideration for the disposals of £13.8mln, £1mln is contingent on the sale of 100 Embankment and will be paid by Dukehill within 5 business days of signing of the sale documentation in relation to this disposal.
AREL and ACD carry out commercial property development activities, together with various partners, in the North of the UK, including Manchester, Liverpool and Leeds.
Together they contributed £4.1mln of revenue, £11.6mln of pretax profit, and had £19.2mln of gross assets to Carillion in the financial year to 31 December 2016.
Modest profit on disposal expected
Carillion said the transaction is expected to generate a modest profit on disposal, and the interests being sold were not expected to make a material contribution to overall group profit for 2017.
The monies raised will be applied in reducing the group's overall leverage position
Commenting on the deal, Keith Cochrane, Carillion’s interim chief executive, said: 'We are pleased to be able to announce further progress.
“Much remains to be done, and we are continuing to execute our plans to refocus the business, reduce cost and strengthen our balance sheet.'
READ: Carillion jumps on lifeline as it agrees new credit facilities, debt deferrals, disposal to Serco
At the end of last week, Carillion named its new chief executive officer, with Andrew Davies - currently boss of privately-owned construction firm Wates Group Ltd - to take over the role from 2 April 2018.
Earlier in the same week, the firm revealed that it had agreed new credit facilities and deferrals on some debt repayments, and also said 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.