Carillion concludes near-£50m deal to sell healthcare assets
Struggling Carillion has agreed a near £50m deal to further dispose of elements of its UK healthcare facilities management business.
The Wolverhampton company announced today that it had concluded an agreement with Serco to sell a portfolio of 15 sites and associated contracts in a deal worth £47.7m.
The final clearance for the deal rests with Carillion’s shareholders. However, as the company needs to cut costs and raise funds as quickly as possible following an horrendous second half to the year, this is expected to be a formality.
The purchase price will be paid in a series of instalments, with the aim of receiving the bulk of the proceeds in the second and third quarters of 2018.
Carillion said that after taking account of fees, costs and taxes, the net disposal proceeds were expected to be £41.4m.
The proceeds will go towards paying off the company’s £140m committed credit facilities.
The disposal, agreed as part of the group’s ongoing strategic review, forms part of a plan to sell off around £300m of its non-core assets in order to reduce net debt and refocus the group on its core strengths and markets.
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.”
Lazard & Co is acting as lead financial adviser and sponsor to Carillion in relation to the disposal.
On July 10, Carillion announced it was undertaking a comprehensive review of its business after issuing a major profit warning which saw the departure of former chief executive Richard Howson.
Alongside this, it announced further actions to reduce net borrowing, including an intention to raise up to £125m from non-core disposals in the twelve months to July 2018.
The announcement caused panic amongst investors, sending the group’s shares into freefall and into a position from which it has yet to recover.
In September, it revealed the £300m plan to dispose of the non-core assets as well as proposals to sell off its UK healthcare business.
In October, it revealed it had signed heads of terms with Serco for the disposal of a large part of its UK healthcare facilities management business for £50.1m, subject to a limited working capital adjustment.
This was subsequently revised to the £47.7m price agreed today. The revision followed talks to exclude the contracts and assets relating to one of the sites for which Carillion provides healthcare facilities management services.
In its statement announcing the deal, Carillion said: “As a consequence of the reduced volume of primary PPP transactions in the (public healthcare) sector and the scope of facilities management services becoming more limited to hard facilities management services, the board determined that the facilities management proposition of Carillion’s hospitals contracts no longer forms part of the group’s core strategy.
“Accordingly, and consistent with the group’s commitment to reducing net debt from non-core disposals, the board decided that Carillion should seek to sell the majority of its portfolio of UK healthcare facilities management contracts.”
Subject to finding the right purchaser – one “prepared to offer a satisfactory purchase price” – Carillion said it intended to dispose of the remaining contracts in its UK healthcare facilities management portfolio during 2018.
