TIDMCLLN
RNS Number : 4245U
Carillion PLC
24 October 2017
24 October 2017
Update on financing, disposals and work winning
Carillion plc ("Carillion" or the "Group") provides an update on
discussions with its creditors, disposals and new contract
wins.
New committed credit facilities
Carillion announced on 29 September 2017 that a term sheet for
further committed credit facilities of GBP140m 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 GBP140 million, as contemplated by this term sheet. This
additional liquidity is fully available to draw down now. It
comprises a GBP40m 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 GBP100m
senior unsecured revolving facility maturing on 1 January 2019.
In addition, the Group has agreed 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, (i) the
repayment of the new committed facilities, and (ii) 1 January
2019.
When taken together, Carillion's new facilities and agreed
deferrals outlined above improve Group committed headroom
throughout 2018 by between approximately GBP170m and GBP190m.
Further details are set out in the Appendix.
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.
Disposals
Carillion has signed heads of terms with Serco Group Plc
("Serco") for the disposal of a large part of its UK healthcare
facilities management business for an agreed price of GBP50.1m,
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 pursuant to 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 GBP300m
by the end of 2018 and further announcements will be made in due
course.
Work winning
Recent wins include:
-- Gigaclear - GBP200m contract. 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 GBP200m for the Joint Venture between 2018 and
2020, and will commence immediately.
-- Dubai Creek Harbour - GBP105m contract. Following a
pre-construction period, Emaar Properties has awarded Al Futtaim
Carillion (AFC: a 50:50 Joint Venture) 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 GBP105m for AFC
and work is underway, with completion scheduled for early 2020.
-- Fallowfield - GBP71m contract. Following Carillion's
appointment as preferred bidder (announced on 12 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 GBP71m and work
is underway.
Outlook and guidance
There is no change to 2017 guidance as set out in the interim
results announcement on 29 September.
Commenting Keith Cochrane, Interim Chief Executive, 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."
This and other Carillion news releases can be found at
www.carillionplc.com
This announcement contains inside information.
For more information
Kellie McAvoy, Head of Investor Relations, or,
John Denning, Director Group Corporate Affairs, Carillion plc
+44 (0) 1902 906333
Teneo Blue Rubicon
Charles Armitstead/Haya Herbert-Burns +44 (0) 207 420 3197
Appendix
Key terms of the finance documents
The key terms of the new committed facilities are as
follows:
-- The senior secured facility matures on the earlier of 27
April 2018 and five business days prior to the filing of the 2017
annual accounts for the Group.
-- The senior unsecured facility matures on 1 January 2019.
-- A cash margin of 8% plus LIBOR and 10% (and 12% following
termination of the senior secured facility) plus LIBOR will be
payable on the secured and unsecured facilities respectively.
-- The financial covenants in the new committed facilities will
be on the same terms as the Group's existing revolving credit
facility agreement.
-- The new committed facilities contain covenants typical for
this type of facility, including mandatory prepayment terms and
restrictions on incurrence by members of the Group of indebtedness
and on security subject to limited exceptions, as well as enhanced
information rights.
-- Certain upstream guarantees from Carillion's subsidiaries are
also expected to be provided in respect of the new committed
facilities and certain of the Group's existing financing
arrangements.
The surety providers' commitment to provide contract performance
bonds is split across two facilities: a GBP40m UK bonding facility,
and a GBP40m Canadian bonding facility, both available until 31
January 2018. Bonds issued under the UK facility will be cash
collateralised upon repayment of the new committed loan
facilities.
The key terms of the deferrals agreed by the other key creditors
are:
-- The deferrals on the private placement notes involve a
deferral of cGBP16m private placement notes maturing on 27 November
2017. GBP49m private placement notes maturing on 28 September 2018
may also be deferred to January 2019 if the new committed
facilities have not been repaid before 28 September 2018. The
margin on deferred notes increases to LIBOR plus 10% from the time
of their deferral.
-- In relation to six of the Group's defined benefit pension
schemes, the deferral of employer pension deficit recovery
contributions until as late as January 2019, that would otherwise
have been payable between August 2017 and March 2018, will have a
cash margin of LIBOR plus 8%.
This and other Carillion news releases can be found at
www.carillionplc.com
Cautionary statement
This announcement may contain indications of likely future
developments and other forward-looking statements that are subject
to risk factors associated with, among other things, the economic
and business circumstances occurring from time to time in the
countries, sectors and business segments in which the Group
operates. These and other factors could adversely affect the
Group's results, strategy and prospects. Forward-looking statements
involve risks, uncertainties and assumptions. They relate to events
and/or depend on circumstances in the future which could cause
actual results and outcomes to differ materially from those
currently anticipated. No obligation is assumed to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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