Funds needed for Aberdeen by-pass
Galliford Try raising £150m after Carillion failure
Funding need: Galliford Try is raising extra support
Construction group Galliford Try is being forced to raise £150 million to help complete the Aberdeen by-pass following the collapse of Carillion.
Galliford Try said the compulsory liquidation of Carillion “has placed additional financial obligations on the group” arising principally from the joint venture with Carillion and Balfour Beatty on the Aberdeen Western Peripheral Route contract.
The over-run costs on AWPR, compounded by the compulsory liquidation of Carillion have increased the group’s total cash commitments on the project by in excess of £150m.
It will raise this sum from investors to avoid switching funds from other projects it is working on. Galliford is taking an exceptional charge of £25m on the Aberdeen project.
The company said it continues to make good progress in resolving both AWPR, which is expected to complete during summer 2018, and other legacy contracts.
It no longer undertakes fixed price, all risk major projects of this nature, and has improved its tendering and project selection processes.
It said it has sufficient financial resources to meet its obligations, including the estimated impact of Carillion’s liquidation.
“However, this would involve diverting capital away from the Linden Homes and Partnerships & Regeneration businesses, thereby reducing their ability to capitalise on the material growth opportunities these businesses would otherwise be well positioned to exploit.”
Galliford Try therefore intends to raise £150m of new equity capital in the coming weeks to strengthen its balance sheet and ensure that the Group’s businesses can continue to pursue their respective growth opportunities.
Broker Peel Hunt has been appointed for the first time as joint global coordinator.
Pre-tax profit for the group fell 11% to £56.3m for the six months to December, but when exceptional items are excluded the figure jumped 29% to £81.3m.