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Carillion update on financing, disposals and work winning

Carillion plc provides an update on discussions with its creditors, disposals and new contract wins.

Carillion announced on 29th September 2017 that a term sheet for further committed credit facilities of £140 million had been agreed with five of the Group’s core lenders. Further to this, the Group is pleased to announce the signing of two committed facilities, totalling £140 million, as contemplated by this term sheet. This additional liquidity is fully available to draw down now. It comprises a £40 million senior secured revolving facility maturing on 27th April 2018, secured over shares in certain of the Group’s subsidiaries and particular Group assets, and a £100 million senior unsecured revolving facility maturing on 1st January 2019.

Also, the Group has agreed on new committed bonding facilities, together with the deferral of certain pension contributions and the deferral of repayment of private placement notes due in November 2017 and September 2018. These deferrals will be until the earlier of five business days following, the repayment of the new committed facilities on 1st January 2019.

When taken together, Carillion’s new facilities and agreed deferrals outlined above improve Group committed headroom throughout 2018 by between approximately £170 million and £190 million. The Group 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 has signed heads of terms with Serco Group Plc for the disposal of a large part of its UK healthcare facilities management business for an agreed price of £50.1 million, subject to a limited working capital adjustment. Carillion has agreed to give Serco a period of exclusivity to provide the parties with time to finalise a business purchase agreement, which Carillion and Serco are aiming to sign in the next few weeks.

The transfers of contracts under this disposal are each subject to receipt of third party consents, and, if required, shareholder approval. It is intended for the contract transfers to take place on a phased basis, with the aim of receiving the bulk of the proceeds during the first half of 2018. Further details will be published once the business purchase agreement is signed.

Carillion intends to dispose of the remaining contracts in its UK healthcare facilities management portfolio during 2018.

While Carillion 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. The Group continues to target non-core disposals with aggregate consideration anticipated of over £300 million by the end of 2018, and further announcements will be made in due course.

Carillion telent, a 60:40 Joint venture with telent, has signed a contract with Gigaclear, the ultrafast pure fibre broadband company, to build a broadband network in Devon and Somerset. The contract is expected to generate revenue of up to £200 million for the Joint Venture between 2018 and 2020 and will commence immediately.

After a pre-construction period, Emaar Properties has awarded Al Futtaim Carillion the contract to deliver Creek Horizon, a collection of premium residential apartments located at the Island District in Dubai Creek Harbour. The contract is expected to generate revenues of approximately £105 million for AFC and work is underway, with completion scheduled for early 2020.

Following Carillion’s appointment as a preferred bidder - announced on 12th April - Carillion has signed a contract with the University of Manchester to design and build Phase 1 of its Fallowfield Student Residences project. The project has an estimated construction cost of £71m and work is underway.

There is no change to 2017 guidance as set out in the interim results announcement on 29th September.

Commenting Keith Cochrane, Interim Chief Executive said: “Today we are announcing progress on some fronts and while 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.”