Carillion Sells Property Development Sales for £13.8M
Carillion has decided to sell its shares for an aggregate amount of £13.8 million. The struggling company which focuses in construction and support services in the UK has decided to let go of its shares in both (ACD) Ask Carillion Development and (AREL) Ask Real Estate Ltd through their owned subsidiaries as well as associated entities.
The company has made the decision to sell its shares to Dukehill, a property company that is based in West Midlands. This is seen as part of the company’s efforts to raise more figures that will help its present balance sheet strengthened.
The company has let go of its shares in AREL along with ACD for a total of £13.8 million. Of that figure, which West Midlands-based company Dukehill has covered, £1 million is form the sale of the 10 Embankment. This is the building that the firm is presently constructing in Salford.
For the financial year of 2016, the businesses managed to sell a contributed revenue amounting to £4.1 million. It has also recorded a total figure of £11.6 million in profits. A total f £19.2 million has also been recorded for the gross assets to the businesses owned by Carilion. However, these profits can vary quite considerably and would usually depend a lot on the time when the developments get completed.
This particular transaction is seen as a way to help Carillion generate a modest profit on disposal. It should also be noted that the interests that are being sold for this transaction are not anticipated to make any material impact to the overall profit of the group for this year.
AREL, which is based in Manchester, is mainly involved with building projects in the North East parts of the country. It is often known to partner with the local authorities and is responsible for developing projects such as conference centres and new offices. Despite the sale, John Hughes who serve as AREL’s managing director and Jonathan Cross, AREL’s finance director are expected to remain in their respective executive positions. Both of them own a total of 33pc for AREL.
This latest development now brings the overall disposal made by Carillion in the last week to around £64 million. This includes the sale of some of the contracts for healthcare facilities management to Serco.
It should be known that the company is setting its eyes towards raising a total of £300 million to reduce the debt mountain that it is presently facing. The firm aims to achieve this by selling many of its varied assets. It is expected that the sale can amount between £825 to £850 million by the end of the year.
Carillion’s interim chief executive, Keith Cochran stated that he was pleased with how the plans to sell some of the divisions of the firms are progressing. According to him there is so much that still needs to be done and that they are on track to execute these plans to allow the business to refocus, to reduce their costs, and to ultimately, get their balance sheet to emerge stronger.