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Kier sells Australian business to reduce debt

Kier has sold its Australian road maintenance business for around £24m and will use the profit to reduce its net debt.

KHSA was a subsidiary of Mouchel, which Kier bought out in 2015.

The group announced to the markets this morning that Australian infrastructure specialist Downer Group had bought the road asset management and maintenance business.

The deal is worth up to AUS$43.7m (£24.8m) which is expected to generate a £15m profit for Kier. This will go towards reducing its net debt, which can be achieved by increasing cash reserves or repaying borrowings.

Selling non-core assets such as KHSA is part of the Future Proofing Kier programme, which has the wider objective of cutting the company’s debt.

In its results for the year to 30 June 2018, the group’s average net debt stood at £375m.

Kier’s debt, which the company says is backed by its housing assets, has caused concern among investors and seen 12.7 per cent of Kier’s stock shorted.

Finance director Bev Dew told Construction News last month that the company was working to prove to the market that Kier was in control of its debt.

He said: “If we can show the debt is moving down, then the market takes comfort in that.”

The company has pledged to cut its average net debt to £250m by 2021.

Last week Kier was named among the winners of Highway England’s £8.7bn six-year regional delivery partnership framework. It will work on projects in the North worth more than £100m.

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