On 24th October 2017, Carillion announced that it had signed heads of terms with Serco Group plc (“Serco”) for the disposal of a large part of its UK healthcare facilities management business (the “Disposal”). Further to this, the Board of Carillion today announces that it has entered into a definitive Business Purchase Agreement (the “BPA”) with Serco.
- A portfolio of UK healthcare facilities management contracts and associated ancillary contracts and assets (the “FM Arrangements”) which relate to fifteen sites will be transferred to Serco on a phased basis pursuant to the Disposal
- As the Disposal is a Class 1 transaction for Carillion under the UK Listing Rules, the Disposal is conditional upon the approval of Carillion’s shareholders. The transfers of the FM Arrangements are also conditional on, among other things, receipt of all required third party consents
- An agreed proportion of the total consideration of approximately £47.7 million (subject to a limited working capital adjustment, and a limited adjustment in the event that the FM Arrangements are transferred ahead of or behind an assumed schedule) will be payable in instalments on the transfer of each FM arrangement to Serco, with the aim of receiving the bulk of the proceeds in the second and third quarters of 2018
- After taking account of fees, costs and taxes, the net Disposal proceeds are expected to be £41.4 million and, when received, will be applied in prepayment and cancellation of an equivalent amount of the Group’s £140 million committed credit facilities (the “New Money Facilities”) announced on 24th October 2017
- The Disposal forms part of the Group’s £300 million non-core disposals target announced as part of its strategic review in order to reduce net debt and refocus the Group on its core strengths and markets
Keith Cochrane, Carillion’s Interim Chief Executive, said: “I am pleased we have been able to successfully conclude this transaction which will contribute to our efforts to reduce net debt.”