Struggling UK construction and support services company, Carillion, has announced it is to dispose of its shares in Ask Real Estate Limited (AREL) and Ask Carillion Developments (ACD) for an aggregate cash consideration of £13.8 million to West Midlands-based property company, Dukehill as its seeks to strengthen its balance sheet.
Of that figure, £1 million is said to be contingent on the sale of 100 Embankment in Salford, which will be paid by Dukehill within five business days of signing of the sale documentation in relation to this.
AREL and ACD (through their wholly owned subsidiaries and other associated entities) carry out commercial property development activities, together with various partners, in the North of the UK, including Manchester, Liverpool and Leeds.
For the 2016 Financial Year, the interests that are the subject of the Transaction contributed £4.1 million of revenue, £11.6 million profit before tax, and £19.2 million gross assets as at 31 December 2016.
Carillion has said that the transaction is “expected to generate a modest profit on disposal, and the interests being sold were not expected to make a material contribution to overall Group profit for 2017″.
The transaction consideration will be applied in reducing the Group’s overall leverage position and, following the Transaction, AREL will be deconsolidated from the Group’s accounts.
AREL Managing Director, John Hughes, and Finance Director, Jonathan Cross, who together own 33.33 per cent of AREL, will retain their executive positions.
Commenting, Keith Cochrane, Interim Chief Executive, said: “We are pleased to be able to announce further progress. Much remains to be done, and we are continuing to execute our plans to refocus the business, reduce cost and strengthen our balance sheet.”
Last week it was announced that Serco Group had signed Heads of Terms to acquire a portfolio of selected UK health facilities management contracts from Carillion for total consideration of £50.1 million.