Galliford Try launches £157.6m rights issue in wake of Carillion collapse
Listed regeneration company Galliford Try has launched a rights issue to raise about £157.6m as a direct result of the collapse of Carillion.
The Warrington company – one of the UK’s major housebuilding, regeneration and construction groups – has incurred between £30m and £40m of exceptional costs related to the Aberdeen Western Peripheral Route which it was working on with the liquidated company in a joint venture.
It’s half-year results to December announced a related £25m exceptional cost.
The terms of the group’s joint venture agreement are such that the remaining joint venture members are obliged to complete the contract, with any shortfall funded equally by the remaining joint venture members.
The final over-run cost to the group will be its share of costs actually incurred to complete the project, including half of those costs not covered by Carillion, less the Group’s half-share of any recoveries ultimately obtained.
The over-run costs on AWPR, compounded by Carillion’s compulsory liquidation, are expected in total to absorb in excess of £150m of Galliford Try’s cash (prior to any recoveries).
“However, the total exceptional costs and final cash impacts of the AWPR contract are ultimately dependent on completion of the project and agreement of any associated recoveries, which cannot currently be predicted with certainty,” a statement said.
It went on: “The group continues to make good progress towards resolving AWPR and practical completion of the construction work is expected in summer 2018. Further, despite the issues encountered in relation to AWPR, the 2021 strategy and related financial targets remain unchanged.”
Galliford Try is one of the UK’s major housebuilding, regeneration and construction groups, operating through three businesses, Linden Homes, Partnerships & Regeneration and Construction.
During the period from 2009 to 2017, Galliford Try’s group revenue, grew from £1,46bn to £2,67bn, both organically and through acquisition.
It benefited from, the recovery of the UK housebuilding market following the global financial crisis and the expansion of Linden Homes and Partnerships & Regeneration, as well as the acquisition of Miller Construction in July 2014, Shepherd Homes in May 2015 and Drew Smith in May 2017.
Midcap specialist broker Peel Hunt is acting as joint global coordinator on the rights issue.