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Costain survival plan meets cool response
00:00 11 Jul 1996
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COSTAINISanxiously awaiting approval from its two major Middle East
shareholders for the survival plan it announced last week.
Alan Lovell, chief executive of Costain, told CJ: "We have explained the deal to them in outline but they haven't commented since we issued the circular giving details of the proposed open offer. We are offering further discussions."
The plan involves the injection of œ78 million of capital: œ42 million from Intria, a Malaysian-based construction group, and an additional œ36 million from Costain's banks.
Mohamed Abdulmohsin Khar-afi, a Kuwaiti construction group, and Raymond International of Saudi Arabia each hold 19% of existing shares. Both have been cool towards the latest proposals.
According to City analysts, the two Middle East groups could be dragging their feet either because they are planning their own take-over of Costain, or because they do not want to put up the additional capital necessary to maintain their existing stakes in the group.
Lovell has proposed a three-for-one issue of 155 million shares at 50p, a move which would take Costain's total shares up from the present figure of 53 million to a new total of 208 million.
"I hope we're out of the woods," said Lovell. "We're very excited at the developments. It was Intria who approached us and, yes, it was a welcome knock on the door."
Intria specialises in infrastructure work. It is the concession holder of Penang Bridge, where it collects tolls until the year 2018. Its latest annual results show a pre-tax profit of œ5 million on turnover of œ59 million. Net borrowings were œ20 million.
Costain's latest results were announced last week and show a massive loss before tax of œ131 million. This included œ38 million operating losses along with œ93 million write-downs in the carrying value of assets.
Money raised by the proposed open offer would cut Costain's debt to a mere œ3 million, with the imminent sale of two divisions moving it into cash surplus.
US Coal is expected to raise œ50 million, while Costain's marine pipeline business, Land & Marine, "could be sold in the next few weeks" according to Lovell.
n Back from the brink: how Intria saved Costain - pages 16-17
Alan Lovell, chief executive of Costain, told CJ: "We have explained the deal to them in outline but they haven't commented since we issued the circular giving details of the proposed open offer. We are offering further discussions."
The plan involves the injection of œ78 million of capital: œ42 million from Intria, a Malaysian-based construction group, and an additional œ36 million from Costain's banks.
Mohamed Abdulmohsin Khar-afi, a Kuwaiti construction group, and Raymond International of Saudi Arabia each hold 19% of existing shares. Both have been cool towards the latest proposals.
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According to City analysts, the two Middle East groups could be dragging their feet either because they are planning their own take-over of Costain, or because they do not want to put up the additional capital necessary to maintain their existing stakes in the group.
Lovell has proposed a three-for-one issue of 155 million shares at 50p, a move which would take Costain's total shares up from the present figure of 53 million to a new total of 208 million.
"I hope we're out of the woods," said Lovell. "We're very excited at the developments. It was Intria who approached us and, yes, it was a welcome knock on the door."
Intria specialises in infrastructure work. It is the concession holder of Penang Bridge, where it collects tolls until the year 2018. Its latest annual results show a pre-tax profit of œ5 million on turnover of œ59 million. Net borrowings were œ20 million.
Costain's latest results were announced last week and show a massive loss before tax of œ131 million. This included œ38 million operating losses along with œ93 million write-downs in the carrying value of assets.
Money raised by the proposed open offer would cut Costain's debt to a mere œ3 million, with the imminent sale of two divisions moving it into cash surplus.
US Coal is expected to raise œ50 million, while Costain's marine pipeline business, Land & Marine, "could be sold in the next few weeks" according to Lovell.
n Back from the brink: how Intria saved Costain - pages 16-17
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