British construction and support service group, Carillion (LSE: CLLN) sold equity in two of its Public Private Partnership (PPP) projects for a combined £86.9 million. The FTSE250 constituent now expects to move into a positive net cash position by year end.
The deal sees infrastructure investment group Innisfree buying a 20% stake in the New Accommodation project and a 37.5% stake in the Allenby Connaught project. On completion Carillion’s remaining equity in the projects will be 20% and 12.5% respectively.
At 31 December 2008, the combined value of the assets in Carillion's balance sheet that are the subject of the transaction was £76.7 million. The total combined pre-tax profit attributable to these assets was £7.5 million in 2008.
The deal is in line with the group's policy of recycling equity in its investments in Public Private Partnership projects.
The proceeds will be used to reduce the Group's net borrowing. The valuation reflects the cash flow value, which the equity would have generated for Carillion over the length of the contracts.