Gleeson building produced a turnover of £308 million and lost £6 million in the year to June 30, 2004. It loss another £16.6 million in the six months to December 31 2004 and is expected to incur further heavy losses in the second half of the year.
The board looked at selling the operation externally but could not find a buyer and closing the business would have risked escalating project overrun costs.
Gleeson Group will fund the MBO to the tune of £14.7 million as it could not find a third party to put up the money.
The group will retain liability for all the existing contracts. At completion of the deal Gleeson will invest £1.1 million in CHOQS 448 and provide a loan worth £2.5 million - at an interest rate of 24 per cent per year.
It will invest up to £7.1 million in CHOQS 448, including £3.6 million in cash on completion and a further £3.5 million in respect of partly paid shares.
It will pay a management charge of £1.7 million a year to CHOQS 448 and up to £500,000 a year in relation to a supply agreement with Speedy Hire. A further £2.9 million will be shelled out in relation to a number of ongoing contracts.