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The good, the bad and the struggle
00:00 04 Jul 1996
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The construction industry is divided about Costain - some regard it
as a good quality contractor which ought to survive, while others
say Costain's banks should help the industry's overcapacity problem
by pulling the plug.
Balfour Beatty, working in jv with Costain on the Cardiff barrage has described Costain as a wonderful technical contractor. Others have gone further, giving Costain the accolade of "the UK's best international contractor".
But, that said, Costain has run into seemingly endless financial problems, the result of a weak balance sheet and continuing losses. Over the past five years losses have run to œ500 million and current debts stand at œ80 million.
At long last Costain's US coal division has been knocked into shape and a sale is imminent. A source within the merchant bank handling the sale said: "We are in the final stages. There were numerous interested parties: we are still negotiating with the final one. You could say it is almost sold.
"The last time Costain tried to sell US Coal it failed, since then it has put its house in order. The business is making a profit. It is not a liability," he insisted.
Mark Hake, analyst with UBS Phillips & Drew, said: "Costain is not likely to go bust. It wants to refocus on core civil engineering. The Malaysian group wants a 50% holding. It obviously doesn't want the whole lot - that would be difficult with Kharafi and Raymond holding a blocking stake."
It is not clear whether the two Middle East contractors, Kharafi and Raymond, are pleased with the latest developments. Nasser Mohamed Kharafi, vice chairman of Kharafi, told CJ: "We are still in negotiations."
Costain UK property division's site at Spitalfield, London, is still a liability, said Hake, though he added: "The fact that a Dutch bank is building a new trading floor is a help. Admittedly this is not in Costain's part of the site, but it enhances the value of the remainder. "Spitalfield is a big investment with no return, it represents non-performing assets."
Costain now has a market capitalisation of just œ20 million.
Balfour Beatty, working in jv with Costain on the Cardiff barrage has described Costain as a wonderful technical contractor. Others have gone further, giving Costain the accolade of "the UK's best international contractor".
But, that said, Costain has run into seemingly endless financial problems, the result of a weak balance sheet and continuing losses. Over the past five years losses have run to œ500 million and current debts stand at œ80 million.
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At long last Costain's US coal division has been knocked into shape and a sale is imminent. A source within the merchant bank handling the sale said: "We are in the final stages. There were numerous interested parties: we are still negotiating with the final one. You could say it is almost sold.
"The last time Costain tried to sell US Coal it failed, since then it has put its house in order. The business is making a profit. It is not a liability," he insisted.
Mark Hake, analyst with UBS Phillips & Drew, said: "Costain is not likely to go bust. It wants to refocus on core civil engineering. The Malaysian group wants a 50% holding. It obviously doesn't want the whole lot - that would be difficult with Kharafi and Raymond holding a blocking stake."
It is not clear whether the two Middle East contractors, Kharafi and Raymond, are pleased with the latest developments. Nasser Mohamed Kharafi, vice chairman of Kharafi, told CJ: "We are still in negotiations."
Costain UK property division's site at Spitalfield, London, is still a liability, said Hake, though he added: "The fact that a Dutch bank is building a new trading floor is a help. Admittedly this is not in Costain's part of the site, but it enhances the value of the remainder. "Spitalfield is a big investment with no return, it represents non-performing assets."
Costain now has a market capitalisation of just œ20 million.
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