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Galliford Try rights issue targets £157mln to cover shortfall from Carillion joint venture

Published: 06:47 27 Mar 2018 EDT

builders site
The Carillion joint venture’s construction projects will complete in the summer.

Galliford Try PLC (LON:GFRD) plans to raise £157.6mln via a rights issue that’s intended to plug a funding gap in its "Strategy to 2021".

The UK builder last May flagged a negative £98mln impact, non-recurring costs attached to legacy contracts for a joint venture with Carillion PLC (LON:CLLN) and Balfour Beatty plc (LON:BBY).

READ: Galliford Try slumps as it raises capital and reports profit drop after Carillion collapse

In January, in the wake of Carrilion’s compulsory liquidation, the company revealed that it expected to take an additional £30-40mln hit in relation to the joint venture and it also announced a £25mln exceptional cost in its half year results.

It is expected that the joint venture’s construction projects will complete in the summer.

Proceeds from the rights issue will help cover the over-run costs for the joint venture, as well as strengthen the Group's balance sheet as it advances the “Strategy to 2021”.

Shareholders will have the right to acquire one additional Galliford Try share for every three shares they own, with the new shares priced at 568p each.

Strengthen group's balance sheet

"Following the group's strong financial and operational performance in the first half, with revenue growth across all three of our businesses and excellent progress against our 2021 strategy, we are pleased today to announce the terms of the Group's fully underwritten rights issue,” said Peter Truscott, Galliford Try chief executive.

“We see excellent opportunities and demand for both our private and affordable homes businesses and our construction business continues to benefit from the current and planned investment in the nation's infrastructure”.

Truscott added: “The rights issue proceeds will strengthen the group's balance sheet and ensure that the Group's businesses are in a position, with the appropriate capital, to deliver on their respective growth opportunities in line with the group's stated 2021 strategy."