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Carillion sells UK healthcare arm to Serco for £50m

Carillion has agreed to sell its UK healthcare arm to services giant Serco for £50.1m as part of the contractor’s debt reduction and restructuring plan.

The firm announced in a financial update that it had signed heads of terms with Serco to dispose of its UK healthcare facilities management business subject to a “limited working capital adjustment”.

News of the sale follows an announcement earlier this month that Carillion had received “a number of offers” for the healthcare business.

The company also revealed that a £140m credit line had been agreed with its core lenders.

Carillion said the additional funds were available to draw down with immediate effect and would help it shoulder any short-term debt or cashflow issues stemming from its losses on four key contracts.

Three UK contracts, which are believed to be the £353m Midland Metropolitan Hospital in Birmingham, the £335m Royal Liverpool University Hospital and the Aberdeen bypass in Scotland, account for most of the losses in the construction division. Carillion has also posted losses on a contract in the Middle East.

In a statement, the company said: “This additional liquidity is fully available to draw down now.

“It comprises a £40m senior secured revolving facility maturing on 27 April 2018, secured over shares in certain of the group’s subsidiaries and over certain of the group’s assets, and a £100m senior unsecured revolving facility maturing on 1 January 2019.”

The firm also confirmed £376m of newly secured work including a £105m contract to deliver Creek Horizon residential scheme in Dubai Creek under it’s 50:50 joint venture Al Futtaim Carillion, a £200m contract to expand the broadband network in Devon and Somerset through a JV with Telent, and a £71m contract with the University of Manchester to design and build the first phase of its Fallowfield student residences.

Commenting on the sale of the UK healthcare arm, interim chief executive Keith Cochrane said: “Today we are announcing progress on a number of fronts and whilst 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.”

Readers' comments (1)

  • Only £50m for the groups main asset? What else is there that is worth more than the healthcare FM business?

    The final death throes of this group shouldn’t last too long.

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