Costain "breaking the rules"

A power struggle between two of Costain's three major shareholders has landed the company in trouble with the Stock Exchange.

The conflict could result in Costain losing its market quotation, leaving 15,000 smaller shareholders without an open outlet for their shares.

A spokesman for the Stock Exchange said this week: "The present Costain situation breaks the rules. We are working with the company."

The problem is that three shareholders own 77.3 per cent of the total Costain shares: Intria (Malaysia) has 40 per cent, Kharafi (Kuwait) holds 25.2 per cent, with Raymond International (Saudi Arabia) sitting on 12.1 per cent.

Kharafi has been most active recently, buying up shares in an attempt to counter Intria's new power base (CJ 15 August).

Stock Exchange rules say that for a listing on the full market, there must be a free float of at least 25 per cent of shares in the hands of private investors.

Costain must now either force the major shareholders to reduce their stakes - difficult given the rivalry between Kharafi and Intria, or issue more shares - not feasible so soon after the recent rights issue.

The sale of Costain's US Coal is "reasonably near". Two interested firms are US energy company Mapco and Zeigler Coal Holdings, America's fourth-largest coal producer.