Crisis-hit Carillion confirms 'credible' offers for healthcare business
Shares jumped in crisis-torn infrastructure giant Carillion after the company confirmed it had received 'credible' offers to buy its healthcare business.
Nursing a £1.15 billion half-year loss after revealing major problems with construction projects at home and in the Middle East, the Wolverhampton-based company is looking to sell off some of its businesses to shore up its ailing balance sheet.
It is also pulling out of all future public-private partnership (PPP) building work and slashing the size of its UK construction business.
The sale of the healthcare business is part of Carillion's recovery plan.
The operation employs 8,000 people in the UK, Canada, the Middle East and Turkey working at hospitals and medical centres on maintenance, cleaning, catering, security and as porters and reception staff. The business turns over around £200 million a year.
In many cases the work is a result of Carillion building the hospitals. Its current contract to build the Midland Metropolitan Hospital at Smethwick includes a 30-year deal to provide maintenance as 'facilities management'.
But the £350 million super-hospital is facing delays of six months or more and it is thought to be one of the four "challenging" contracts that account for about half of the £845 million write down in the value of Carillion's construction work revealed in July, sparking the current crisis.
In a brief statement to the City yesterday, the company said: "In view of media speculation about a possible sale of Carillion's UK Healthcare business, the board of Carillion confirms that, consistent with Carillion's announcement on September 29, 2017, it has received proposals from more than one credible counterparty for a possible acquisition of that business.
"A further announcement will be made as and when appropriate."
Shares in Carillion jumped on the news, but still sit around their lowest since the company was formed in 1999, when it was split off from parent company Tarmac. Carillion still employs around 400 at it head offices on Wolverhampton's Ring Road St Mark's.
While the healthcare sale is important to Carillion's efforts to bolster it finances, the biggest boost would come from a buyer for its Canadian business, which is also up for sale. It employs 6,000 of Carillion's 43,000-strong workforce and is worth revenues of more than £600m a year.
Meanwhile workers in the UK are braced for major job losses after the company warned it needed to slash its costs.
Interim boss Keith Cochrane aims to take £75 million out of the £336 million a year it costs to run the business. Most of it will will come from the £267m spent in the UK, where it employs 20,000 people.